Returns from dairy markets are well ahead of what suppliers are getting. A dairy farmer’s annual income in Ireland is largely decided by payments received in April, May and June – and the costs over the same period. Costs have gone up. Milk price has lifted but only marginally relative to commodity prices.

When co-op boards meet over the next two weeks, the pressure will be on to match the prices the market is returning. Any further gap between dairy market performance and farmgate prices will need to be justified. The job of each board is to road-test the reasoning with management, given all the information available.

The difference between the market and farmgate prices for April was 2c/litre. As co-op boards meet to pay for May milk, they need to be aware of the market realities and short- and long-term costs at farm level.

While there is buyer uncertainty regarding food-service demand, European commodity prices firmed in recent weeks due to reduced product supply and strong retail sales. This in itself is a fair reflection that the market is strong and demand is high. The European powerhouse of milk supply from January to April is flat at a time when you would expect higher volumes. New Zealand is in slumber on dairy markets until the new calving season kicks off slowly from now on.

This week's cartoon

\ Jim Cogan

Tillage: harvest potential

As most crops stand tall and healthy in the June breeze, cereal farmers wait with anticipation to see what weather will come over the next eight weeks to allow them harvest this potential. In this week's edition, Andy Doyle examines the market and what has been happening with one eye on the future. The future remains hazy with much dependent on what happens in the US, Russia and South America. The acreage under maize in the US is also critical. That’s the reality of a market driven by global supply and demand.

Related to this and the environmental adaption that farmers are making is Siobhán Walsh’s report on how cover crops in Wexford, following cereal crops, are allowing for big changes in soil health and quality. Just as livestock farmers are investing in slurry equipment and better genetics, cereal farmers are having to do more to maintain their lot and not get any credit for the carbon sequestration benefits. Farmers need to watch this space very closely.

Forestry: licensing delays continue to frustrate

Also this week, Donal Magner outlines the views of politicians and the forestry industry on the ongoing licensing issues. There were over 2,800 felling licences issued from January to May 2019 versus circa 720 for 2021 – and four times more trees felled in 2019. So far, only 879 hectares have been planted in 2021, which is a long way off the Government target. The Department seems to suggest the situation is improving. However, the numbers tell a very different story. Only roading licenses are reasonably OK for 2021. If agriculture is struggling for recognition at Governmental level, forestry looks to be in even deeper trouble.

Innovation key to export routes

The Bord Bia Readiness Radar report launched this week highlights the positivity and development that Irish companies invest into export markets. The stark reality that nine out of 10 companies exporting to Britain are incurring additional costs resulting in reduced margins might just be the tip of the iceberg when it comes to the long-term costs associated with Brexit for Irish food companies. While the EU offers potential market share, the reality is the new and best markets will be further east where risk is higher, cost of doing business is higher and taste preferences are very different. Innovation and new thinking has never been as important.