Northern Irish milk producers are questioning the effectiveness of the province’s milk auction system, following another month of disappointing prices.

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At last Thursday’s auction (22 January), United Dairy Farmers – the province’s main milk handler – achieved an average return of 18.5p/litre for the 45m litres sold on a one month contract.

This was up almost 2p/litre on last month, but still about 4p/litre down on the same January auction last year, and a massive 16p/litre lower than when prices peaked in mid-2007.

To some extent, the small improvement reflects the fact that butter and skimmed milk powder manufactured next month will qualify for intervention, once public stores open on 1 March.

They may also have benefited from the reintroduction of export refunds last Thursday, which saw Brussels accept bids for 5612t of powder at a maximum refund of €200/t, and 2299t of butter at up to €500/t.

But the Ulster Farmers Union was not impressed by the latest auction – which saw prices range from 17.9p/litre to 20.1p/litre – and questioned whether the system was generating the best return for dairy farmers.

“We estimate an intervention price of approximately 18.5p/litre, yet some bids were actually lower than this,” said UFU chief executive Clarke Black.

“We acknowledge that the Northern Ireland dairy sector’s product mix is weighted towards powders, but we do nevertheless have a range of products including liquid milk, cheese, yoghurts and so on. Some of these markets which processors are operating in are significantly better than intervention, so should the auction price not reflect this?”

With some buyers prepared to pay 20.1p/litre, Mr Black questioned whether the range of market opportunities was being fully reflected.

“Retail liquid milk prices remain high, but this doesn’t seem to be coming through at all in the auction. Instead we seem to end up with ‘lowest common denominator’ prices every month.”