The Ulster Farmers’ Union has called for an urgent meeting with United Dairy Farmers to discuss a drop of more than 3p/litre at UDF’s auction today (24 March).
The union described the fall of almost 11% to 26.66p/litre as a major blow which would alarm dairy producers. At 51m litres, volume at the sale was the same as at the 24 February auction but 6m litres down on the March auction of last year, when prices were 25.63p/litre.
“This drop in prices is not in line with producers’ expectations or needs,” said dairy policy chairman William Cromie.
“We also believe the full benefits of recent global market conditions have not been passed back to producers. We now seem to be in a cycle where if the Fonterra global auction price in New Zealand falls, then we can expect to see our prices fall immediately; but if the Fonterra global auction price rises, then this is not resulting in a similar rise in our local prices.
“Dairy producers won’t accept a system where their prices will quickly fall if market conditions deteriorate, but don’t rise sufficiently when market conditions improve.
“The fact that current exchange rates are very favourable for our industry adds to the sense of concern about the way our milk auction prices are responding to market conditions.”
Senior DairyCo analyst Arnaud Haye said that the surprise was not that there had been a drop in the auction price but the scale of the fall. Recent wholesale price reductions in both world and EU markets had come at a time when supply was running up towards peak production in Europe and buyers were possibly less certain about market prospects, he said.