A number of milk processors in NI have cut prices for May supplies, with Glanbia Cheese the first NI company in nearly 30 months to take its base price below the 25p/litre barrier.
The Magheralin-based processor shaved 0.5p/l off price from the previous month, taking it to 24.75p/l before adjustments for quality and volume.
Sources in Glanbia Cheese said the cut in price was due to a softening in dairy commodity markets, mainly driven by high volumes of milk, however, the move sparked anger among suppliers.
It also prompted a reaction from the Ulster Farmers’ Union (UFU), which argues that current price cuts are unjustified.
Under the proposal, milk processors would have to set out clear terms, including on future prices, and how these prices are calculated
“It is this kind of unscrupulous action by dairy processors that highlights why the industry needs an honest and frank debate around mandatory milk contracts. If mandatory contracts were in place, this unjustified cut to the base price could not have happened,” said UFU deputy president Victor Chestnutt.
A Defra consultation on mandatory milk contracts is expected later this year, and could form part of a post-Brexit UK agricultural policy.
Under the proposal, milk processors would have to set out clear terms, including on future prices, and how these prices are calculated.
However, processor representatives warn that they would be less able to respond to market changes (such as higher demand) and it could lead to lower overall prices paid to farmers.
Other prices
While Glanbia Cheese took its base below 25p, others are not that far ahead. Dale Farm announced a 0.5p/l price cut on Thursday of last week, taking it to a base of 25.3p/l, a price which includes the co-op’s 0.3p/l loyalty bonus. It is the lowest Dale Farm base price since September 2016.
Strathroy also applied a 0.5p/l cut, taking base price to 25.5p/l, a price matched by Aurivo which took 0.25p/l o? for May. Glanbia Milk held for the third consecutive month at the same 25.5p/l price.
Also holding was Lakeland, on a base of 25.25p/l.
A full analysis on milk prices will be featured in next week’s milk league.
GDT
Meanwhile, this week’s GDT auction was down 3.8%, bringing the index price to US$3,208/t. Tuesday’s event is the third negative auction in a row after 11 successive price increases.
The latest GDT index converts to an approximate milk price of 33p/l before deducting processing costs and operating margin, which is normally 4p/litre to 5p/litre
Butter fell sharply by 5.3%, as did cheddar with a 4.3% price drop. Skim and whole milk powder were down 3.5% and 4.3% respectively.
The latest GDT index converts to an approximate milk price of 33p/l before deducting processing costs and operating margin, which is normally 4p/litre to 5p/litre.
In general, European markets remain slightly behind New Zealand prices. Skim milk powder did ease at this week’s Dutch Dairy Board (DDB) auction, but at €2,070/t, skim prices are well above prices seen over the last 18 months.
Whole milk powder also fell at the DDB, but is still running ahead of 2018 prices. However, DDB butter prices are down by 50% on this time last year.
GDT dairy prices down nearly 4%
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