Mr. O’ Leary was commenting on the recent announcement of the 1.8point increase in the May Ornua PPI to 106.8. This equates to a milk price of 32c/litre (excluding VAT). This after a deduction of 6.5c/litre for processing costs. The IFA feel with the dairy markets recent steady improvement that farmers should see the benefits with a milk price up lift for May. They hope that farmers may receive up to 2c/litre higher prices.
Mr. O’Leary spoke of the recent National Farm survey showing that farmers were the ones feeling the pinch, he said “The National Farm Survey shows farmers took the brunt of the dairy downturn, with a 17% fall in 2016 incomes. While co-ops clearly supported milk prices in 2016, which reduced but did not eliminate profits, Irish dairy and ingredients exports increased 2% to €3.38b, and the dairy recovery is continuing in earnest into 2017 – but farmers have not seen the full benefit of it,’.
He called on co-ops to resist the temptation to increase their own profits and asked for milk prices to be increased, “Farmers’ incomes fell despite a 4.4% increase in production. Milk prices increased around 7.5c/l between July 2016 and February 2017, but have stagnated ever since. While co-ops may be tempted to further rebuild their balance sheets, milk prices must now be further increased,’.
Though farmers were supported by coo-ops last year with them supporting milk prices although it still led to a significant loss in incomes for dairy farmers.
Mr. O’Leary spoke of the recent GDT auction where the prices remained improved for the 6th consecutive time, He said “Both global and EU dairy prices have been rising strongly in recent weeks, as confirmed in yesterday’s GDT auction, the 6th bullish one in a row. EU butter prices as quoted by the EU Milk Market Observatory for 28th May 2017 have increased by over 18% since this year’s trough in early March. SMP prices have lifted over 7% since late April, while WMP is up 6.5% over the same period. Cheddar prices are up 5.5% and whey powder prices over 7%.
Mr. O’Leary concluded by adding that now the markets have improved sufficiently it is the time to reward farmers, he said “We are very clear that, as co-ops have increased sales significantly in recent months, and as dairy prices are recovering to, in the case of butterfat especially, historical levels, there is real scope for further milk price increases to be passed back to Irish dairy farmers’.