Co-ops can afford to hold milk price

IFA National Dairy Committee Chairman Kevin Kiersey believes that although weakness had crept into EU and international dairy markets in recent months, co-ops had improved their margins significantly in 2010 and 2011, and most could afford to hold milk prices at least through the Spring.

IFA National Dairy Committee Chairman Kevin Kiersey believes that although weakness had crept into EU and international dairy markets in recent months, co-ops had improved their margins significantly in 2010 and 2011, and most could afford to hold milk prices at least through the Spring.

He commented, “Increased global milk supplies and the economic downturn have clearly impacted international dairy markets in recent months. However, this is a very expensive time of year for Irish farmers to supply milk, and simply too early in the Irish production season to make definite milk price decisions.”

“Co-ops generally collect relatively little milk this time of year, and will collect even less this year because of superlevy restrictions. Most can afford to hold milk prices over the coming months, because they have improved their margins in 2010 and 2011 at times when strong dairy prices coincided with strong milk supplies,” he added.

“Recent Fonterra auctions are showing a mixed picture for international dairy markets in 2012, and it is too early to prejudge 2012 milk prices,” he said.

“Irish milk supplies will remain constrained by the prospect of superlevy for the next few months, and with less than usual milk to collect, most co-ops will be able to hold milk prices for the Spring, at which point we should have a better feel for the realities of the market,” he concluded.