Cream the only thing holding up milk prices – Strathroy

The healthy cream (butter) market is the only thing keeping farmgate milk prices at their current level and not back in the low twenties per litre, Strathroy director Ruairi Cunningham told the Irish Farmers Journal this week.

Due to extremely tight global stocks, butter prices are nearing the point of overheating, with in excess of €5,000/t paid for butter last week.

Cunningham was speaking after his company reported operating profits of £518,623 for the year ended 31 July 2016, which is more than double (+57%) compared with the previous financial year.

Operating margins at the Tyrone-based milk processor increased 400 basis points to a slender 1.1%, reflecting the competitiveness of the liquid milk market today.

Strathroy recorded a sixfold increase in pre-tax profits to £415,444 for the 12-month period, while sales declined 5% to just under £47m. The decline in farmgate milk prices in the second half of 2015 and early 2016 saw Strathroy’s cost of sales decline 7% to £40.5m.

Cunningham said milk volumes supplied to Strathroy from its 150 farmer suppliers in the Republic of Ireland were “well up” in the last year as farmers continue to expand since the abolition of milk quotas.

“Milk volumes are well up in the last year. This year, we are on track to process 90m litres from southern suppliers. We’re at the milk volume peak right now and with the weather the way it is this peak could plateau for a bit longer than other years,” said Cunningham.

The Strathroy director added his company will continue to attract additional suppliers, both new entrants and established producers.

Read more

Farmers push to the 1bn litre mark in May

Is there a butter shortage on the cards?

Fonterra raises outlook on milk price