Prices unchanged - outlook promising

By Joe Rea

31 July 2004: May league prices are unchanged. This confirms the consistency of Irish milk price returns. Prices have remained largely unchanged for all of this year.

June prices have already been set and again will show no change. Industry indications are that all creameries will hold the July price unchanged.

The outlook for August/September is promising, again a no change situation.

The consequences of a no price change is significant from 1 July when the Brussels payment kicked in. Those payments are worth 1.2c per litre (4.3p per gallon).

However, even with the Brussels plus, price levels are 1c a litre under our 2001 benchmark. Inflation from May 2001 to May 2004 is 11%, meaning that another 2c per litre is required to cover inflation over this period.

Strengthening world dairy markets are the key factors in this "no change'' situation.

This was reflected in a recent statement from Fonterra chief executive, Andrew Ferrier, who said that commodity prices were at historic highs - he was confident commodity markets would remain stable for the rest of the year. Hence Irish prices should hold for August and September.

IFA - NFU

The Irish objective is to achieve a "no change'' situation for the rest of the year. The IFA Dairy Committee and secretary Catherine Lascurettes have had an impressive impact on achieving the "no change'' situation to date.

Their performance contrasts sharply with the English NFU. They have become largely ineffective to the milk price issue.

But then this vacuum has been partly filled by Farmers For Action groups. They have threatened to blockade Dairy Crest Dairies because of a proposed price cut on liquid milk for June. Dairy Crest are considering erecting security fencing to deal with the problem.

English dairy farmers that I have spoken with are disillusioned with the NFU performance. They claim that NFU are too close to the UK establishment. As one English milk supplier put it "NFU will not rock any boat - too many of them are working to get on the Honours List.''

May price movement

The top five positions in the standardised league goes to Kerry and four Co Cork creameries. The leaders are Kerry, North Cork, Newmarket, Boherbue and Bandon. They all beat 27.10c/l - an excellent performance in the current circumstances.

Boherbue are in the number one spot at 27.10c/l for payment on actual creamery constituents. Remember Boherbue is the creamery that has outsourced its testing of fat and protein. Interestingly the creamery in third place, is Thurles, paying 27c/l. It has also outsourced their milk testing. Kerry makes it to second place with a good price of 27.05c/l.

Monaghan top - 3.78c/l gap

The price gap between League toppers Monaghan and United is a significant 3.78c/l (13.52p per gallon). Monaghan is now a serious Northern player with 18.5% of the milk supply.

Monaghan's Northern price on our Republic milk league basis is 27.10c/l. This is just marginally above that paid in the Republic at 27.0c/l. However it should be noted that 0.5cl has already been deducted from Monaghan's Republic price to cover a number of state and dairy board levies. No such deduction is made from the Northern price because their levies are so marginal, amounting to only 0.0282c/l. Lakeland is in second place at 26.83c/l compared to Republic price of 26.91c/l - no real difference. Glanbia is marginally below its southern pay out.

Irish Farmers’ Journal Milk League Tables

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