Dairy processors boost milk prices in bid to encourage production

Dairy processors have again moved to address a significant decline in milk production by raising milk prices, aiming to encourage farmers to boost their output as autumn approaches.

This decision follows a challenging period marked by poor weather, decreasing prices, and rising costs, which have all contributed to a concerning reduction in milk output.

The drop in production is a serious issue for milk processors, who have heavily invested in expanding processing capacity in recent years. For the first half of 2024, domestic milk intake was estimated at 4.35 billion litres, a decline of 242.6 million litres (5.3%) compared with the same period in 2023.

The decrease is even more pronounced when compared to the first half of 2022, with a drop of 284.8 million litres (6.1%).

Amid the decline, Tirlán said today it will pay a total of 44.83 cent per litre (cpl) (including VAT) for July creamery milk supplies at 3.6% butterfat and 3.3% protein. This is an increase of 1.75 cpl on the payment for June.

Earlier, Dairygold announced an increase in its July Quoted Milk Price by 2.0c per litre, bringing it to 44.5c per litre. This adjustment translates to an average farm gate milk price of 49.8c per litre, based on the average milk solids achieved by Dairygold suppliers in July 2024.

A company spokesperson highlighted that improved dairy market returns, particularly driven by rising butter prices, were a key factor in the decision. The spokesperson emphasised that Dairygold is committed to encouraging suppliers to maximize milk production for the remainder of the year.

To further support this effort, and to help farmers increase their winter fodder stocks, the board announced a feed rebate of €15 per tonne on mainline feed products for four weeks starting from 12th August 2024. The board also noted that it will continue to closely monitor the markets and review milk prices on a monthly basis.

Last week, Kerry Dairy Ireland set its milk price for July at 44c per litre (including VAT). Based on Kerry’s average milk solids for July, this equates to a return of 48.32c per litre.

It pointed out that global dairy demand remains stable, with strong demand outside of China, though weak demand from China continues to pose a challenge. However, rising butter prices have provided a boost to dairy market returns.

Lakeland Dairies was the first processor to raise its milk price for July. The cooperative announced a base price of 45.25c per litre in the Republic of Ireland, including a 0.5c per litre Sustainability Incentive Payment. This represents a 1.75c per litre increase from the previous month.

Commenting on the recent price increases, IFA National Dairy Chair Stephen Arthur said, “It’s imperative that milk processors deliver a significant price increase for July supplies. Dairy farmers have endured a horrendous 12 months, which has taken a massive toll on cash flow.

"The coming months offer dairy farmers a chance to improve their balance sheet, but they can only do this if their processors step up with a strong milk price.”

Reporting on:independent.ie