First indications of base prices set for September milk supplies in Northern Ireland are that they are down by between 1.5p/l and 2p/l, relative to the previous month. This is similar to the drop sustained for August milk relative to July.

Town of Monaghan Co-op has cut its base by 2p to 25.5p/l, while Lakeland Dairies base price is down by 1.75p at 25.75p/l. Back in June, the Lakeland base was 30p/l and Monaghan’s was 30.5p/l.

A year ago, both of these buyers had base prices at 33p/l and all other buyers were at or above that base level.

The year-on-year drop is more than 7p/l, a reflection of some of the fall seen in dairy markets. According to the EU Milk Market Observatory, European prices for butter and skimmed milk powder are below those of a year ago by 26% and 32% respectively.

Further falls in local ex-farm milk prices remain on the cards for October supplies as processors are reducing prices gradually. Extraordinary market support within the EU is needed to put a bottom in prices, particularly while Russia continues its ban on imports from the EU.

EU Commissioner Dacian Ciolos surprised many this week when he proposed a compensation package to assist dairy producers in the countries who are suffering most directly from the Russian ban. Finland and Baltic countries were said to be seeking aid for their dairy farmers worth €100m to €150m.

Commissioner Ciolos suggested that a targeted fund could be a combination of European support and State Aid, adding that the producers could go bust within six months if no compensation is provided.

The Commissioner asked the Council of Ministers if they could show solidarity during this time of crisis. Most were supportive but Dutch and UK delegations called for more information and the Irish were reported to be most vocal against the activation of the agricultural crisis reserve, highlighting the political difficulty in having to accept a decrease in direct payments to finance the crisis reserve.

UFU leaders met this week with representatives from Dairy UK Northern Ireland to discuss the current difficulties being experienced in the world dairy market.

Afterwards, UFU president, Ian Marshall said he was encouraged by the quick and continued targeted action taken by the European Commission, particularly for the Baltic States who have been most affected with 60% of their dairy output destined for the Russian market before the ban was introduced.

The UFU president said that given the lead-in time at EU level, there is a need to start exploring the potential introduction of other market measures, such as intervention and export refunds, now in case they are needed should the market situation deteriorate further.

In the past week, delegations from the UK, Germany, Sweden and the Netherlands are reported to have ‘‘shot down’’ Polish requests to reintroduce export refunds to assist the EU dairy sector. The Polish Minister had said that measures launched so far were inadequate.

Correction

In a news item last week, we reported that approximately nine milk producers in the Ballymena area were believed to have switched away from supplying Fane Valley Co-op to instead supply Connacht Gold/Aurivo Co-op and that around 10 million litres of annual milk supply was understood to be involved. We have since learned that only three producers actually made this switch.

Rumours about producers switching between milk buyers have been flying around, with some even suggesting that a producer could have made a move and then come back within a matter of hours to his original milk buyer.