Milk prices have collapsed in Northern Ireland, as the malaise affecting global commodity markets impacts on demand for many of the dairy products traditionally produced in the province.

At its monthly auction last week, United Dairy Farmers sold 48m litres of short-term milk for an average 18.03p/litre. This was 7p down on September’s auction and over 14p less than was achieved 12 months ago.

United Dairy Farmers chief executive David Dobbin blamed the slump in international dairy markets, the lack of export refunds and the fact Northern Ireland is poised to bring powder plants back on line.

“Last year we saw a boom in dairy markets driven by a strong world economy, good demand from China, tight global milk supply and low powder and cheese stocks,” he said. “Now we have the exact opposite – a weak global economy, a collapse in demand from China following the melamine crisis, a recovery in milk production especially in New Zealand, and high powder and cheese stocks.”

Butter prices were at a 10-year low, cheese markets were falling and international buyers were holding off. “The dairy industry in Ireland, which is more dependent on export sales than almost any other region of the EU, is at the sharp end of the current slump,” said Mr Dobbin.

But his comments have been criticised by the Ulster Farmers Union which described the price collapse as “bewildering”.

“Milk processors will claim that this result reflects world commodity markets, but currently all Northern Ireland milk is being processed into added value retail or food service products where returns are much higher,” said UFU president Graham Furey.

Even though the drop in United Dairy Farmers’ auction price will take a month or two to filter through to milk cheques, the UFU said dairy farmers would soon be losing 6p-7p on every litre they produced.