Good news on milk price

By Paul Mooney and Regina Fogarty

It is largely due to healthy casein markets, the strength of which has largely cancelled out support cuts.

Other casein manufacturers likely to benefit include Glanbia, Dairygold and Lakeland.

The Kerry move is significant because some co-ops continue to warn of price cuts coming down the tracks. At last Friday's meeting of the Carbery board, management warned that prices would have to fall by the equivalent of the EU support cuts.

This was in turn relayed to board meetings this week in the West Cork co-ops that own Carbery. The latest Kerry move will put significant pressure on them and other co-ops to hold prices for August milk.

The decision was signalled for the coming Farmers Journal Milk League to be published next week.

They have decided to hold the price for August deliveries at the July Milk League level of 27.42c/l. This impressive achievement puts them again on top of the League.

The Kerry decision to hold their base price will deliver a very good actual pay out price for August. If one assumes that Kerry fat and protein is at the same level in August 2004 as in August 2003 they will easily beat 28 cent per litre - or the magical pound per gallon target.

The hope now is that others will follow the Kerry lead.

In an age when farm gate prices for grain, beef and pigs are in turmoil this mark of stability from Kerry is more than welcome. As farmer prices tumble one gets the impression that it is a case of "fiddling while Rome burns''.

A focus must be kept on farm price levels rather that other jamborees.

One recalls the instruction given to former US President Bill Clinton if he was to succeed: "It's the economy stupid.'' This could be paraphrased in an Irish context: "It's farm gate prices stupid.''

All other creameries are holding their July price at June level. This is good against the actions of the Brussels saboteurs on milk price support.

One of the reasons for the Kerry performance is the significance of their casein manufacture. This raises other questions. Can other casein manufacturers like Arrabawn, Glanbia, Connacht Gold, Dairygold and Lakeland also hold their August price at the July level?

The casein market situation is that while Brussels cut the aid in July the market has moved up to cancel out this reduction. This leaves it very possible that all other Irish creameries manufacturing casein will be able to hold the price for August.

Indeed, my international market contacts tell me that they anticipate the casein market to remain strong at least for September. Therefore, there is no reason why September prices can not be held by creameries manufacturing casein.