End milk price cuts as market recovers - IFA

IFA Dairy Committee chairman Jim O"Rourke was disappointed by the milk price cuts decided by the boards of Glanbia and Lakeland last week, despite face-to-face meetings with IFA representatives. Glanbia announced a March price cut of 3.7c/l to 20 c/l + VAT, while Lakeland is cutting its March price by 2c/l to 22.3c/l +VAT. 'This must be the end of milk price cuts for 2009,' said Mr. O"Rourke, 'as farmers are already in a serious loss-making situation, and markets are starting to recover. 'International dairy markets are beginning to turn around, and the EU Commission has again put a floor under the EU market,' he pointed out. This means milk prices should be held, as dairy farmers are facing unprecedented income hardship. 'Some co-ops, notably Glanbia and Dairygold, have hammered their suppliers by slashing prices to 20c/l, which was last paid in 1983. 'This is totally unsustainable, as 2009 costs require a minimum price of 27c/l for farmers to break even. Last week, I told the Glanbia board members and the chairman and CEO of Lakeland Dairies that current milk prices, at between 20 and 25c/l will leave dairy farmers with zero or negative incomes for 2009,' Mr. O"Rourke added. 'EU and world dairy markets have started rallying and last week again in Brussels, the EU Commission put a strong floor on markets. 'EU traders now know that butter will not get any cheaper. Dutch Gouda prices have risen €400/t in the last two weeks. In New Zealand, the Fonterra WMP auction prices have gone up by 21% over the last two months. Globally, EU exporters have reported increased levels of enquiries as world buyers return to markets to fill short-term needs. In Europe, consumer demand for butter is picking up in the key markets for the IDB"s Kerrygold brand,' he added. 'Lastly, falling production in the US (-0.8% in March) and the EU (-0.6% in the last quota year) will help rebalance markets in coming months,' he added. 'Dairy farmers are at the end of their tethers, and are looking at massive income losses in 2009. Co-ops have to recognise that markets have bottomed out, and that milk prices to farmers must, too. 'This means they have to make it clear right now that they will hold milk prices until such time as improved returns in the coming months will enable them to increase them again,' he concluded.