IFA national dairy chair Tom Phelan has said there can be no doubt that dairy markets are now recovering and co-ops need to reflect that in prices paid to farmers.

International quotes for dairy commodities have been firming for weeks due to slower milk growth in the EU and lower volumes from New Zealand.

Tellingly, last week, the European Commission sold 42,000t of SMP out of intervention at an improved price.

Phelan said co-ops must now stop talking down milk prices, and start leveraging those higher returns for suppliers.

“The European Commission has sold 41,958t of SMP out of intervention for a minimum price of €1,150/t – €100/t higher than last month, showing clearly improved buyer sentiment. This is a total reduction of over 76,000t in the intervention stock overhang,” Phelan said.

“Buyers understanding that the days of cheap dairy products are over is also in evidence in rising international prices, which in the last week returned between 31c/l (EU MMO) and 34c/l (average of European spots) before VAT for an Irish product mix, after deduction of a nominal 5c/l processing cost.

“Co-ops don’t just trade in standard SMP and butter, however. Higher-value fat-filled powders, whey products and infant formula ingredients are increasingly important in their product mixes.

“It is now time for co-ops to stop talking down milk prices, and to start leveraging the improved returns for the benefit of farmers,” Phelan concluded.

You can get dairy market analysis in the IFA dairy market blog at www.ifa.ie/dairy or receive a regular digest of dairy news each month by subscribing at www.ifa.ie/sign-up.