Dairygold-Kerry pay 27.9c/l for April

By Joe Rea

Both Dairygold and Kerry are paying a milk League price of 27.9c/l for April milk. That is within a whisker of the magical £1 per gallon (99.82p/g). This is indeed a most encouraging reflection of the international buoyancy in dairy markets. A market which can deliver even more on Irish milk price in the months ahead.

The Kerry-Dairygold price is a classic example of the importance of competition among creameries. On Tuesday of last week it was common knowledge that Dairygold had increased their price by 10.2c/g. The highest increase in the country.

At that point the Kerry increase stood at 6.7c/g. However by Wednesday and in time for the publication of the Farmers Journal Kerry had trumped the Dairygold price. They had increased their 6.7c/g to 10.5c/g. Like winning an All Ireland with the last kick of the ball.

The consequence is that both Dairygold and Kerry are now paying the same price (see Predicted April Table). Up to this Kerry were marginally behind Dairygold in the League. Their new price has wiped out this difference and both are now in equilibrium. What would have happened if Dairygold had not moved on price?

Also changing significantly are Connacht Gold, admittedly from a low base. When their quality adjustments are included they delivered a price plus for April of 11.8c/g. This takes them to 27.1c/l in the Predicted April League.

It is not going to end there. Glanbia with over 20% of the national milk supply will now have to move up. Their announced increase of 6.7c/g is now an historical irrelevancy. Current management has the capacity to produce a 10c/g plus increase.

I have already credited them with this amount in the predicted April Table.

Just think what it will look like if they stay at 6.7c/l. However even with this they are still lagging behind the leaders.

This is not justified. This gap can be partly bridged if their spin off bonus without strings attached comes on stream. The objective must be the Kerry-Dairygold price.

Today's reality is that 10c/g plus is now the norm. Those who have already set their April price at over 6c/g such as Arrabawn, Lakeland and Glanbia must get back the drawing boards. They have to set the increase at over 10c/g plus a catching up factor on their traditional price in some cases

This is also true for those who have not made an April price increase announcement. If the market is to be reflected then the minimum starting point must be 10c/g plus VAT. That would take many creameries nearer to the 28c/l target, which I calculated was justified on market returns some weeks ago in the Farmers Journal. Since then world markets have further increased making a 29c/l target achievable.

Irish Farmers' Journal Milk League Tables

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