Where will the milk market stop?

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Prices paid at Fonterra’s Global Dairy Trade (GDT) event have increased by almost 20% since the beginning of August.

So is this a flash in the pan, or the start of a sustainable trend? These are questions which every dairy farmer in Northern Ireland would love to know the answer to right now.

But, irrespective of how the market develops over the coming months, in specific terms, there is no denying the increasing – and positive - sentiment that now exists on the part of those who determine the tone of international dairy markets.

The significance of the GDT event is the fact that it reflects the tone of dairy markets on a global basis.

However, adding to the specific feel good factor for milk producers in Northern Ireland is the recent weakening of Sterling against both the Euro and the US dollar. In effect, this makes our exports more competitive in markets around the world, while making imports coming into the UK less competitive.

So on the back of both the recent GDT results and the currency factors, now kicking into play, there would seem no reason why dairy processors should not be committing to significant farmgate milk price 
increases over the coming months.

It would also behove the likes of the Dairy Council and the Ulster Farmers’ Union to go public with their perspectives on how world dairy markets are likely to perform over the coming months and how this will all play out for dairy farmers.

But one swallow doesn’t make a summer. The legacy of the previous crash in world dairy markets, that had such a catastrophic impact on Northern Ireland’s milk sector, must be addressed in the most effective manner possible. And it makes sense to be addressing all of these issues while markets are on the up, rather than waiting for the next crash – which will certainly come.

At the very least milk producers must be offered options by the dairy processors, which will help them cope with the challenge of volatility for the long term. If individual farmers take the option of simply riding the markets, then that’s their decision. But most producers will want to secure a sustainable future for their businesses – one that is built on a high degree of stability, where both milk price and farm inputs are concerned.

Back in May of this year, the Ulster Farmers’ Union hosted a conference at which a host of speakers confirmed that it is possible to develop business models that will guarantee long term stability for milk producers. It is now time for some of these ideas to be implemented here in Northern Ireland.