The UFU is continuing to lobby for a review of the Intervention levels and measures to address price volatility despite the continuing recovery in global dairy commodity prices.
This week has seen the sixth consecutive rise in the New Zealand Fonterra dairy auction all-product index, rising from $2,513/tonne in early December to $3,366/tonne at the latest event on 17 February.
With a drought officially declared in New Zealand and reduced product volumes available for sale at Fonterra for the next two trading events (3rd/17th March), the likelihood is that commodity prices will continue to rise at these events.
Likewise in the EU, the Dutch Dairy Board has seen all products rise since the beginning of the year, with butter rising from €2,720/t in the New Year to €3,370/t and WMP rising from €2,110 to €2,720/tonne.
Yet, several key concerns may need to be heeded as we are by no means out of the woods yet and the situation remains volatile. This has been confirmed by Arla Foods declining to publish revenue or performance forecasts for 2015. All dairy commodity prices are recovered from a very low base. Secondly, the weakness of the Euro will impact upon the competitiveness of product in these markets. Finally and most crucially of all, there is such uncertainty as what signals will be created when milk quotas are abolished at the end of March.
Consequently, the UFU are meeting George Eustace to discuss the effectiveness of EU Dairy Intervention and other measures to deal with the unprecedented price volatility as seen over the last 12 months, not only to ensure that we are not in this position again in 30 months’ time (by when prices may have peaked and fallen) but also to deal with the volatility over the next 6 months which could taper the pending recovery.
With prices recovering the UFU will be monitoring the situation closely with the hope that the recovery will be sustained and the above concerns are not realised and at the same time rising commodity prices are acknowledged by the processors and worked through into the farmgate milk cheques.