IFA national dairy committee chairman Tom Phelan has said that the improvement in all international dairy market indicators makes price increases imperative at this point.
He stressed that they were also absolutely necessary as farmers’ milk receipts were squeezed and production costs bumped up by drought.
“An increase of 1cpl at the very least is fully justified for June to begin with,” Mr Phelan said.
“Through May and June, we have seen a continued general improvement in market returns, especially for butter – now stabilising – and powders. The Ornua PPI has improved five points for May to 105.4 or 31.4cpl, including VAT. It has been predicted by new CEO John Jordan to rise further for June and the following months,” he said.
Mr Phelan pointed out that EU and global commodity markets had been strengthening, with the EU MMO returns up by just over 5cpl since January - more than half of the reduction seen over lower volumes between September and December 2017. Latest figures suggest a milk price equivalent, including VAT, of 34.63cpl.
“Dutch, German and French spot quotes, based only on SMP and butter prices, suggest a milk price equivalent over 37cpl including VAT,” he added.
Despite a slight easing of prices in the last two GDT auctions, the June 19 prices for the SMP / butter combination would yield an Irish price equivalent of 33.5cpl including VAT, he said.
“This is the time of year farmers normally use the peak milk cheques to clear their financial commitments. After a tough costly spring, milk receipts are being squeezed and costs are rising in the heatwave. Co-ops need to lift milk prices to allow farmers pay their bills,” said Mr Phelan.