May bonus for Irish milk men

22 June 2001

May bonus for Irish milk men

By Philip Clarke

IRISH dairy co-ops have passed on an extra 2p/gal (0.34p/litre) to their members for May milk, in response to firming product markets.

Commodity values bottomed out in early April, since when the Irish Dairy Board, which deals with most of the countrys exports, has raised its "on account" price to the co-ops five times.

The most recent increase came on June 8, following a Ir£50/t rise in the skimmed milk powder fraction. This gave a milk equivalent value to processors of 121.5p/gal (20.88p/litre), more than 11p over the early April return.

"All product markets are firm at the moment," said IDB brands manager Pat Ward. "Cheese in particular is driving it, partly because EU consumers have been put off red meat and are looking for alternative protein supplies."

Historically, cheese demand has increased by about 2%/year, he says. But this year it has been more like 3.5%. With the cheese make up about 6%, that is leaving less milk for butter/powder manufacture, resulting in firmer prices for those commodities.

Mr Ward expects the firm prices to last at least until the autumn.

The Irish Farmers Association believes the co-ops should be paying farmers at least 106p/gal (18.22p/litre), before 4.3% VAT, for May milk. "Given that the processors average return during the month was 117p/gal, that still leaves an 11p margin," said milk adviser Catherine Lascurettes.

So far, only Dairygold, Newmarket and Drinagh co-ops have hit that level, lifting May milk 2p to 106p/gal, 106.13p/gal and 107.3/gal respectively.

Golden Vale was one of many to match the move, but not the price. Following a large farmer protest outside its Limerick offices late last week, it lifted its May return by 2p to 103.5p/gal (17.79p/litre), well short of the IFA benchmark.

Town of Monaghan and Kerry also added 2p/gal. But Tipperary Co-op was up a more modest 1p/gal to 105.65p/gal (17.88p/litre). "Thats still too much," said general manager Noel Horgan. "We may have had five increases from the IDB, but before that we had six decreases which we never matched."

The IFA reckons co-ops should be paying at least 108p/gal (18.56p/litre) for standard 3.3% protein, 3.6% butterfat milk in June.

&#8226 Dairy market managers in Brussels have cut the level of export refunds for butter and cheese by 12% and 15% respectively, in response to firming world markets for these two products – the first changes in almost two years. Skimmed milk powder subsidies were all but eliminated last year following the meteoric rise in that market. &#42

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