Monaghan IFA Dairy Committee Chairman Seamus Brennan said the decision by
the Glanbia board to increase their January milk price by 1.44c/l + VAT to
29.94c/l + VAT was a welcome first step in passing back the rising market
buoyancy back to their suppliers.
He said, “We in IFA had clearly identified the scope in January commodity
returns for an increase of 1.5c/l.  We had also emphasised the need for a
price lift in the face of massive feed, fertiliser and fuel cost increases.”
Mr Brennan said an analysis by IFA had forecast that feed, fertiliser and
fuel price increases could lift overall milk production costs by 14% in 2011
when compared with 2010 costs.  “This means that, just to maintain margins,
milk producers will need an average milk price 3c/l higher in 2011 than in
2010,” he said.
“We have lobbied board members in all co-ops in recent weeks, to impress
upon them that current strong market returns allow for early milk price
increases to deliver the necessary margin improvements,” he added.
Mr Brennan pointed out that the outlook for dairy markets in 2011 is very
positive, underpinned by weather and feed-cost related global shortages, and
strong demand from China, Russia, Algeria and Korea.
He said continued buoyant prices as signalled all the way to October 2011 by
the most recent Fonterra auction, would enable co-ops to increase prices
further in the next few months, which would hopefully ensure at the very
minimum that dairy farmers do not see reduced margins this year.