Milk price shows signs of recovery at Ulster auction

Milk prices at this week’s auction by Northern Ireland milk co-operative United Dairy Farmers have shown signs of recovery, with 45m litres achieving 25.63p/litre on a one-month contract.

That was more than 2p/litre better than in February and the highest March value for more than a decade. But it was still below the 27.72p/litre achieved for December, when supplies were tighter.

Prices then dropped in January and February, although this was seen as a correction to the high prices in late 2009.

Ulster Farmers Union dairy committee chairman William Cromie said this week’s increase – which is for April milk sales – provided “a big confidence boost to the dairy sector at a time when we are hitting peak spring production”.

“In 2009, the average auction price for the first three months was 18.38p/litre, in comparison to the first three months of this year, which was 24.33p/litre. This endorses our positive forecasts in recent weeks, which were based not only on evidence of strengthening markets, but also around exchange rates and production levels.

“In light of market conditions and a growing confidence in the industry, we expect this result to be sustained in the months ahead.”

The better returns are expected to be fed through to United Dairy Farmers’ members in the May milk cheque, said UFU dairy adviser Chris Osborne. “Producers need the money to just break even, following a hard winter, in which the cows have been kept in longer while feed prices have been rising.”

The increase would follow a 3.75p/litre cut in February, taking the average Northern Ireland farmgate price down to 21.67p/litre.

The developments come in a week when the UK’s largest dairy co-op First Milk announced it was increasing the price to its liquid milk suppliers by 0.8p/litre and Arla Foods Milk Partnership announced a small price cut for its “non-aligned” milk producers.

All eyes are now turned on Tesco, which was meeting the Tesco Sustainable Development Group this week to negotiate the new “cost tracker” price for April. An announcement is expected next week.