February 11, 2011


Ireland increases milk price by 30%



Irish cooperatives raised milk prices by about 30% from 2009 to 2010, according to figures for 17 major producers compiled by the Dutch Dairy Board.


Compared to 2009, the average milk price of the 17 dairies increased by 15%, but jumped 31% at Glanbia and 28% at Kerry.


The 2010 figures, which do not include all supplementary payments after the end of the calendar year, indicate that milk prices of Belgian, Irish, Dutch and German dairies were under the EU average in 2009, but showed the strongest increase in 2010.


The Dutch Dairy Board said 2010 ended with world dairy commodity prices recovering, as markets reacted to tighter availability of dairy products. Markets were extremely sensitive to changes in supply, and several recent reports forecast a slow down in production growth in the most important dairy production regions.


Meanwhile, demand has been growing, as more buyers were attracted by rising prices to cover their needs for future months. In particular, milk powder prices have increased rapidly, with continuing buying interest from Algeria seen as the most important driver of prices. Butter prices also gained ground, as available global export supplies tend to lag behind demand.


Whole milk powder prices gained 7.6% from two weeks earlier, reaching their highest level since June, in last week's Fonterra Global Dairy Trade auction. Traders reported that drought in New Zealand and floods in Australia had seriously reduced supplies.


However, volatile currency markets, rising political tensions in North Africa and the Middle East, and slower than expected economic recovery, could easily lead to market uncertainties, warned the Dutch Dairy Board.


IFA has identified a 1.5c/l January milk price increase as its first target for 2011. Dairy spokesman Kevin Kiersey said farmers need at least 3c/l more than the 2010 average to preserve their profit margins, due to fast rising feed, fertiliser and fuel prices which could increase milk production costs by as much as 14% this year.


ICMSA president Jackie Cahill has also estimated that milk prices need to rise by at least US$0.03 per litre to keep step with production costs.

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