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Co-ops must leverage improved returns

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The Irish Farmers' Association (IFA) has called on co-op boards meeting within the next week to consider May milk prices, to leverage the improved market returns of the last number of weeks to ensure that the totality of the April payout is maintained for May milk supplies.

“Both Arla and Friesland Campina last week announced June milk price increases. Arla increased by 1c/kg, which translated into a 1.15ppl increase for UK supplier members, while Friesland Campina upped their ‘guaranteed’ price by 0.25c/kg. Friesland Campina has stated that it expected European milk purchasers to increase prices further," said IFA national dairy chairman, Tom Phelan.

Market returns have been increasing steadily in the last few months, and now underpin solidly the prices currently being paid by Irish co-ops, with real scope for improvements, he added.

“Using only the SMP/butter combination, we see that the most recent EU spot quotes and market average reported prices would return between 33.21c/l and 36.31c/l + VAT. Even the recent Global Dairy Trade (GDT) auction, which saw a weighted average price reduction of 1.3 per cent, would yield an SMP/butter price equivalent of 31.40c/l + VAT,” he said. 
“Dairy farms have, only in the last month, started to experience some relief from the dreadful fodder shortage and financial pressures following an eight-month winter. Co-ops must take the real opportunity afforded by improved markets to maintain their April payout for May milk, and then leverage the continuing improvements to return correspondingly improved milk prices,” said Mr Phelan.

Tags: milk prices Tom Phelan