The case that can be made for an increase in farmgate milk prices is incontestable.
We have just had the sixth, successive hike in prices at the GDT auction. But, of even more significance, is the fact that milk output in Great Britain is now on the wane – a full month earlier than would normally be the case.
The reality is that farmers had to take the hit when prices started falling like a stone some 18 months ago. So the same principle should be implemented, in equal measure, when markets operate in reverse.
Those who disagree with this perspective will, probably, point to the large tonnages of skimmed milk powder that currently reside in EU intervention stores. These ‘naysayers’ may well make the case that all of this powder is, technically, overhanging dairy markets at the present time.
And, yes, these stocks must be factored into the price equation. But, so too, should the fact that a large proportion of this powder is now well past its sell-by date, from a human consumption perspective. And, of course, the last thing the EU Commission wants right now is another collapse in milk prices.
As a consequence, Brussels will have no option but to be very circumspect in the way it manages the sale of milk powder stocks from intervention.
But overriding all of these issues is the fact that dairy farmers need a sustained period of viable prices – simply to pay back the debts built-up in 2016. And this factor should be uppermost in the minds of board members within the various milk buying organisations, as they set their summer milk prices.
There has been lots of talk over recent months about making ‘improved efficiency’ the mantra of agriculture in Northern Ireland as the challenge of Brexit looms. And that’s all fine and dandy.
But if farmers find themselves in a position where they cannot pay back existing debt, they will hardly be in a position to build any form of sustainable future.
This is why the dairy processors must reflect the full benefit of the recent uplift in world markets back to farmers as quickly as possible.