Let’s hope the increase in prices recorded at this week’s Fonterra Global Dairy Trade Event is more than a flash in the pan.
Certainly the sentiment being expressed by those who – supposedly - know about these things would indicate that dairy markets are on the rebound. So are we going to see a rocketing of prices over the coming months – volatility raising its head again – or will markets react at a more leisurely pace to supply: demand factors? Only time will tell.
But one thing is for sure: the dairy industry must learn from the lessons of the pain endured over the last two years. Simply getting carried away on the back of strengthening prices and forgetting to plan ahead for a rainy day will come back to bite us with a vengeance,
I attended the UFU dairy volatility conference, held before this year’s Balmoral Show, at which great talk was made of the need to put in place a plan, which will allow milk producers cope with the long term impact of fast changing international market trends. A case in point was the commitment made by the Dairy Council to come up with a comprehensive strategy in this regard. So it is vitally important for this work to be completed and its recommendations implemented in full.
Meanwhile, the EU Commission’s emergency voluntary reduction milk aid package will come on stream in September. It will be interesting to see how many farmers here in Northern Ireland take up the €0.14/L payment to cut back milk output by 5% over a three-month period. In my opinion, every local producer should opt in.
It will take at least three months for any resurgence in milk markets to kick in at farm level. Meanwhile, a bit of astute culling and some early drying off should allow most dairy farmers meet the initiative’s criteria and bank the money on-offer from Europe. Under these circumstances, the scheme can be considered a ‘profit making’ exercise.
And, of course, any moves to curtail milk output in Europe will act to further strengthen market sentiment, internationally. It all seems a bit of a ‘no brainer’ to me!