Tipperary farming: milk output drop expected to lead to better prices

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Tipperary farming: milk output drop expected to lead to better prices

The chairperson of ICMSA’s dairy committee, Gerald Quain, has said that the latest milk production figures for July released by the Central Statistics Office “underline graphically” the effect the drought conditions had on dairy farms.

Mr Quain noted that Irish milk production fell almost 27 million litres in July 2018 compared to July 2017, a fall of 3.1 per cent and reflected the immediate knock-ons of the extreme weather and challenges around adequate feed and grass.

While acknowledging both cause and effect, the he was adamant that the fall in supply, which was likely to be replicated across the EU and beyond, must, and will, have a positive impact on prices as the extent of the fall in milk produced worked its way through the chain.

“Prices on European wholesale markets have increased over the last number of weeks with returns for the Butter/SMP mix running at almost 35cpl and WMP over 32cpl.

“The fact for farmers is that revenues are being eaten-up by the increased costs associated with the drought and fodder challenges, but that doesn’t detract from the imperative of getting the highest prices possible from the marketplace back to farmers as they struggle with those increased costs for the remainder of 2018 and into 2019,” said Mr Quain.

Meanwhile, IFA national dairy Chairman Tom Phelan said: "The significant 3.1 per cent downturn in Irish supplies for July reflects the drought which has affected grass growth and milk production all over Northern Europe".

He said that this had slowed European milk output growth dramatically and influenced market sentiment positively.

“We have seen market average, spot and futures quotes improve for most dairy products including SMP in recent days,” said Mr Phelan.

Together with the return to large tonnage sales out of intervention (32,000t of SMP this week at the highest price reached this year of over €1200/t), he said that he expected this should allow co-ops to make a firm commitment to hold current milk payouts (base plus bonus or top up) at least till next spring, at a minimum.

"Farmers who are spending massively more this year on feeding animals need the co-ops to pay as much for milk as markets allow," he said.