Emotions ran high at the meeting of around 200 dairy farmers on Wednesday night, where questions from the floor criticised Glanbia’s milk price. One farmer asked: “Why should we borrow money for the pleasure of milking cows? We would be better off putting trees on our farm at the moment.”

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Another farmer criticised Glanbia for justifying that it was placed fifth on the 2015 KPMG milk price review as it “is skewed by the fixed milk price scheme”.

“There has been serious resistance among farmers to enter schemes taking money off the milk price in the summer and flatten the curve. That is understandable as they were offered at a time when the milk price was above the fixed milk price,” Henry Corbally responded. In his presentation to the meeting, he said that between 30% and 40% of Glanbia suppliers have got fixed milk price contracts. “We intend to initiate others at a price as best we can on the day when old contracts slip out.”

In addressing farmers’ fears over value-added product being sold through the plc and not returning as much as possible to farmers, Corbally said: “We don’t sell product through the plc at all. There is no such thing as cross subsidisation between any two parts our organisation. It is a complete fallacy to say that the plc is funded by the milk price.”

Glanbia was also criticised for increasing the August milk price just days before the deadline for farmers to express interest in the EU’s voluntary milk production reduction scheme.

Scope for further price increases

Catherine Lascurettes described the trend over the last few years as a “27-month slump” in price and this has recovered slightly in July and August. But the executive secretary of the IFA national dairy and liquid milk committees said that there is scope for further price increases.

“The reason for the slump was not because demand collapsed because it didn’t; production increased,” Lascurettes said: “Exports out of the EU have increased significantly; granted, those exports may be at a certain price.”

According to Lascurettes, there are a number of positive signals:

  • The Ornua PPI has increased by 4.8 points in the last two months to 85.8 points, which she said is now equivalent to 24.3c/l including VAT.
  • The EU MMO quotes are up an equivalent of 8c/l in last four months to 32.7c/l gross (27.7c/l excluding VAT or 29.14c/l including VAT, assuming a 5c/l processing cost).
  • While GDT is still at a “lowish” level compared with the last number of years, it has gone up 205 points since July with latest butter/SMP return equivalent to 27c/l to28c/l net milk price.
  • French, German and Dutch milk powder has now exceeded €1,900/t. German spot butter quotes now exceed €4,000. This is a farmgate milk price equivalent of over 31c/l.

    • “EU and global production is continuing to reduce,” she said. “China is back purchasing, nothing as crazy as 2013 and 2014 but still purchasing. With supply coming back with the kind of demand growth that is there, I see no reason why the recovery is not sustainable. Obviously, the US is an expansionary producer and it will very much feature on the landscape.”

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