In view of the fact that dairy farmers are facing zero income in 2009, he urged all co-op boards, which his committee will be meeting in the coming weeks, to resist further milk price cuts for March, and instead to share the pain with clear and comprehensive cost-cutting plans.
“I understand that Fonterra has increased its whole milk powder price by $400 per tonne after the 16.6% price increase recorded at the last auction, clearly signalling an upward trend for powder prices,” said Kennedy. “Closer to home, Dutch cheese prices rose by €400 per tonne in the last week, also a sign of market recovery.
“On the world market, there’s evidence that butter prices are firming, with renewed, if limited, interest from buyers. US milk production is now falling, while EU milk supplies are down 0.5% on the previous quota year, despite a 2 to 2.5% quota increase,” he added.
Kennedy said that these were all strong signs that international markets have turned the corner, milk supplies are rebalancing, and that a recovery will take place over the coming months.
The IFA dairy committee had proven, he said, that 27c/l was the absolute break-even price for Irish milk producers in 2009, as evidenced by the Teagasc Dairy Profit Monitor.
“In our forthcoming meetings with co-op boards, I will urge all board members to use this new deflationary environment to hunt down, ruthlessly, necessary new savings of up to 20% at every level of the business: milk collection, milk testing, processing, administration, marketing, directors’ fees, payroll and joint cost-cutting projects with other societies,” he said.
Source: Limerick Leader
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