By James Campbell

Farmer owned dairy processors Fane Valley Co-op and Dromona Quality Foods are understood to have played a key role at this week's auction of milk by United Dairy Farmers.

Average prices were down again, but could have been even worse if the co-ops had not been present. Thirty three million litres sold on three month contracts averaged 15.05 pence/litre and 11 million litres for supply in May averaged less than 14p/litre. Most of the milk was bought by the farmer owned processors.

The corresponding prices a month ago were 15.48 p/l for three month contracts and 16.18 for April milk on the "spot" auction.

May is the peak supply period in NI and "spot" auction prices for the month in the past 3 years have been 18.32 p/l (2001), 16.72 p/l (2000) and 16.49 p/l (1999) for smaller auctions of 3 to 5 million litres.

This week's offering of 11 million litres reflected current high levels of production and turned into a particularly difficult sale as prices slumped below 13 pence per litre in the latter stages of the auction. That occurred after six million litres had been sold at around 14.5 p/litre, with the farmer owned processors again doing most of the buying. The producer owned processing facilities should be able to make a profit on this milk by manufacturing butter and skimmed milk powder for sale into EU intervention.

As the co-ops reached the limits of their capacity, the bidding slipped to 12.9 pence/litre and the auction was temporarily suspended. The sale was finally completed at a "reserve" price of 12.5 p/litre for the last few lots.