The ongoing resilience being demonstrated in the milk market must force processors to rethink their milk pricing strategy as Irish farmers head towards peak production, according to the Irish Creamery Milk Suppliers’ Association (ICMSA).
Speaking on the topic, the organisation’s dairy committee chairperson Gerald Quain said that, while he recognised that dairy markets had weakened in the last few months of 2017 and that some pressure was exerted on prices, he is adamant that the improvement shown since the start of 2018 has to be acknowledged and factored in.
“The increase in Dutch quotes for butter and whole milk powder (WMP) in the last few weeks have been matched by other European quotes and indicators – and should be justification for processors to keep milk prices at current levels,” he said.
Noting the latest dairy report by the UK’s Agriculture and Horticulture Development Board (AHDB), Quain said that it, too, was of the view that the markets were stronger and more positive than was being assumed.
The dairy chairperson quoted from the report, noting: “I was especially struck by this analysis from the UK body that ‘despite good milk flows throughout the EU, demand for fats pulled prices up quite considerably in February, causing a price spike both in physical and future markets’.
“The ICMSA has been saying for some time now that this conditioning of farmers into accepting a fall in their milk price must stop and the reality of the markets – which is a continued resilience – needs to be acknowledged,” he said.
It was observed that ADHB has put the present increase in price “down to rising demand in the EU as buyers look to secure supplies for the Easter period” thus “adding pressure to an already thin market”.
Quain stressed that this is the present reality and Irish processors need to show a level of confidence in their marketing strategies and their strong 2017 performance in terms of their profits.
The processors should therefore hold milk prices at their current level for the coming months Quain concluded.
By: Sylvester Phelan