25 March 2011

2 minute read

Europe

UFU Dairy Policy Chairman William Cromie described the almost 11 per cent drop in milk prices, down from 29.88 pence per litre last month to 26.66 pence per litre in March, as a major blow to producers.

William Cromie said; “This drop in prices is not in line with producers expectations or needs. Milk prices need to be strong to offset the very significant rises in the costs of feed, fuel and fertiliser which have become a major cost burden for dairy farms in Northern Ireland this Spring. This drop in prices will be a major blow to profitability for producers who are seeing their costs of production rising every week”.

Speaking specifically about the auction system, William Cromie said; “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. For example since late December Whole Milk Powder prices have increased by almost 28% but our milk auction prices have only risen by approximately 11%, a figure which we feel should have been higher. 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”.

The UFU confirmed that it is seeking an urgent meeting with United Dairy Farmers to discuss the current results from the milk auction.

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