PPI rebounds in December
Ornua's dairy price index has recovered much of the ground lost in previous months as processors prepare to set milk prices.

Ornua's purchase price index (PPI) stands at 107.5 for December. This is equivalent to a farmgate price of 30.55c/l excluding VAT, assuming 6.5c/l processing costs.

The index increased by 2.4% last month, reverting most of the losses suffered in the two previous months.

"The December 2018 Index reflects improved spot and powder returns, off-setting lower butter and cheese prices," an Ornua spokesperson said.

Co-ops are preparing to set December milk prices from this week. IFA dairy chair Tom Phelan urged all co-op board members to end what has been a very difficult year for dairy farmers by holding the December price.

Current dairy market trends do justify cautious optimism at least

“Between the last week in December and the first week in January, Dutch spot raw milk prices have increased from just 29c/kg to 33.5c/kg, according to EU Milk Market Observatory reports. "Dutch spot SMP prices have lifted to near €1,800/t. In the first trade of the year, the new European EEX raw [liquid] milk futures saw a milk price equivalent of 35.05c/kg achieved for milk delivered in January [for product to be traded in March 2019],” Phelan said.

He added that production forecasts in the main European dairy producing countries remain down.

“There are real international geopolitical concerns in the year ahead, but current dairy market trends do justify cautious optimism at least," he said.

Nitrates derogation review due by June
The review should not see farmers targeted unfairly, says the ICMSA's Denis Drennan.

Farm organisations are adamant that a planned review of the nitrates derogation should not see farmers unfairly targeted on water quality. The new derogation only came into effect last year, but the review has been instigated by the Department of Agriculture as a pre-emptive measure.

With both Denmark and the Netherlands struggling to retain their derogations, the Department is conscious of the need to demonstrate that the derogation is helping intensively stocked farmers to achieve the highest standards of nutrient efficiency and environmental protection.

Since the ending of dairy quotas, derogation applications have risen, with 7,000 farmers on 466,000ha of land applying in 2018.

Recommendations from the review will be published in June 2019, for implementation next year.

The ICMSA’s Denis Drennan said: “Significant investments in environmental improvements have taken place on farms over the last number of years and that the review must recognise this.”

The closing date for submitting a nitrates derogation application is Sunday 31 March 2019. Farmers who applied for a derogation in 2018 must also submit fertiliser accounts for 2018 by this date.

New applicants who do not have soil analysis results must assume Index 3 for 2019 but soil sample analysis, in respect of crop year 2020, must be available and the fertiliser plan amended.

Dale Farm cuts February milk price
Northern Ireland's largest milk processor, Dale Farm, announced a 0.5p/l price cut on February milk.

Dale Farm has announced a 0.5p/l price cut on milk for February, which brings Northern Ireland’s largest dairy processor to a base price of 26p/l and includes the 0.3p/l loyalty bonus for co-op members.

This follows Lakeland Dairies' announcement on Monday that it also cut its milk price for February. Lakeland will apply a price cut of 0.75p/l, bringing the co-op’s NI base price to 25.75p/l for last month.

The Lakeland price cut sparked a negative reaction from the UFU, after the co-op held its price in the Republic of Ireland at 30.4c/l, excluding VAT. When applying current exchange rates, this converts to 25.84p/l.

Strathroy has left its price unchanged at 27.5p/l for February, with the outlined price inclusive of a 1p/l winter bonus payment.

For full details on milk pricing, see this week’s Irish Farmers Journal.

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Glanbia cuts February milk price
The board of Glanbia met on Monday to set its February milk price.

Glanbia member suppliers will receive 29.9c/l excluding VAT for February manufacturing milk supplies at 3.6% butterfat and 3.3% protein.

This is 0.5c/l less than what member suppliers received for January milk.

Glanbia Ireland maintained its base milk price for February at 28.5c/l excluding VAT.

Glanbia Ireland has maintained its interim market payment of 1c/l (including VAT) on all February milk supplies (excluding fixed milk price schemes paying above 31c/l).

Support payment cut

However, the board of Glanbia Co-op has decided to cut its support payment to members from 1c/l to 0.5c/l including VAT.

The Glanbia Ireland payments and the Glanbia Co-op support payment will be adjusted to reflect the actual constituents of milk delivered by suppliers.

Brexit uncertainty

“Brexit uncertainty has led to short-term changes in purchasing patterns," Glanbia chair Martin Keane said.

"Protein prices have improved, but market returns have not recovered from the reduction in butter prices over recent months.

"While the recent series of GDT auction results is positive, it is from a lower base and remains below the current Glanbia Ireland price.

"With the market-based milk price currently at approximately 30c/l, the board will continue to monitor developments on a monthly basis,” he added.

Glanbia loyalty scheme payments

Participants in the Glanbia loyalty scheme (GLS) will be paid their loyalty reward with their February milk payment.

Participants in this five-year milk and feed scheme will be paid €30/t on their qualifying tonnes of dairy feed purchased in 2018.

This month’s payment covers the period May to December 2018.

In light of the challenging conditions last spring, an interim payment was made in May 2018 for dairy feed purchased in the January to April period.

Lakeland was the first processor to announce a milk price for February supplies. It held at 30.4c/l excluding VAT.

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