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Local dairy processors have decided to hold their milk prices for October, and the indications are that the market will remain flat for the remainder of the year.
Given recent downward trends in world dairy markets, that is positive news for local farmers, especially with winter bonuses ready to kick-in in a number of cases.
Lakeland was first to declare its price and has held at a base of 29p/l.
While it does not pay a winter bonus for October (3p/l in November and December), the company has retained the 1p/l butter bonus payment, putting suppliers on 30p/l before milk quality adjustments.
With a flat milk price expected for the remainder of this year, there is uncertainty from processors for the early stages of 2018
Glanbia Milk and Fivemiletown have also held at a price of 30p/l, made up of a 29.4p base plus their year-round bonus of 0.6p/l.
The October base at Dale Farm is also unchanged, with NI’s largest dairy co-op working from a base of 30.2p/l, but with an additional 2p/l winter bonus on all milk delivered in October.
Add in the 0.3p/l loyalty bonus and suppliers are looking at an all-in price of 32.5p/l before applying adjustments for milk quality.
In addition, under the milk expansion scheme, Dale Farm suppliers will qualify for 4p/l on every additional litre above production levels in October 2015.
This means that a Dale Farm supplier producing 110,000 litres in October 2017, having previously produced 100,000 litres in October 2015, will be entitled to an additional £400 in their monthly milk cheque (10,000 litres at 4p/l).
Glanbia Cheese will also pay a winter bonus of 2p/l on all milk delivered during October.
With its base price holding on 29.25p/l, the Magheralin-based processor is paying an all-in base of 31.25p/l.
Strathroy Dairies announced it was also holding at 30p/l. The Omagh-based processor will pay an additional 1p/l winter bonus bringing the price to 31p/l.
LacPatrick and Aurivo are the two remaining processors yet to declare a price for October.
Outlook
With a flat milk price expected for the remainder of this year, there is uncertainty from processors for the early stages of 2018.
Key commodity prices have fallen since late September and forecasts indicate rising milk production across the EU.
At this week’s Dutch dairy auction, butter prices held steady for the third week in a row at €4,970/t. Prices are well down from record highs in September but are still €600/t higher than the corresponding month last year.
However, whole milk powder fell €50/t to €2,520 with skim milk powder down €10/t to just €1,460/t. Spot price for milk is running at 30c/l, which converts to just shy of 27p/l.
The latest milk price indicator from the Ulster Farmers’ Union fell by 1.4p/l to 28.8p/l. However, if we factor in a 2.5p/l cost to cover processing, re-investment and processor margin, this is closer to a farmgate price of around 26.5p/l, which is significantly below the prices being paid to producers.
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