Milk Price- Please read Mod note in post #1

For anybody interested I managed to find the fao datasets and i extracted the real and nominal price forecast for SMP through to 2025, which is the baseline forecast of the report referenced above.

I don't have time to try and figure out a blend of dairy commodities which reflects our milk prices, but if you are lazy like me you will observe that the SMP dollar price, divided by 1000, looks uncannily close to the highs and lows we have seen in Ireland in recent years, so while it could hardly be a true guide to farmer returns it might give some idea of what the FAO landscape looks like and how it relates to Ireland.

And given that Harvest 2020 was based on a fag packet analysis of the previous FAO report, this seems like the best set of figures to use for comparison.

The red line is real powder prices (adjusted for expected inflation) and the blue line is nominal prices (what powder is worth in dollars).

The actual price, of course, will cycle back and forth much more than the forecasted model suggests, the question is whether these forecasts have any meaning for those trying to make predictions about average / mid cycle prices... the forecast line would be about 20 (real) and 25 (nominal) in 2020, 24 (real) and 32 (nominal) in 2025...

I think Ped, you must become a milk processor, not a producer. is that lesson.

RightTurnClyde wrote: »

On milk production Germany and Netherlands powering ahead. UK,France and Ireland pulling back
http://www.agriland.ie/farming-news/uk-milk-production

Netherlands have pushed on hard for environmental reasons. They have had a retrospective environmental stocking rate limit imposed on them which goes back to July 2 last year. There effective sticking rate is set from that date. They increased stock numbers as hard as possible over the last few yrs to get as high a reference as possible.

This had quiet a detrimental effect on their profitability figures, but they suffered it short term to get their base up.

Their plan now is to remove all young stock from their farms, and replace them or hold milking the increased cow numbers. As Holland has such a high stocking rate, the next move is to have the young stock contract reared in Germany and other nearby countries. ..

alps wrote:

Their plan now is to remove all young stock from their farms, and replace them or hold milking the increased cow numbers. As Holland has such a high stocking rate, the next move is to have the young stock contract reared in Germany and other nearby countries. ..

As always, good intentions + more regulation = unintended consequences.

How did Glanbia fare out in the kpmg milk price table in today's journal. Link won't open on phone

Milk markets have bottomed out and price stabilised ,stable price for rest of year and rise to come early 2017 but don't expect anywhere near 40 c .

freedominacup wrote: »

Where do I bring this post to cash it.


I hope you're right mj. I think you might be. The mood music seems to be changing.

Any indication on June milk price, surely they cant drop anymore?

Bass Reeves wrote: »

Best thing to cure low prices are low prices

Sure thats not getting intervention to save the day, after supposedly being set free :rolleyes:.

newacc2015 wrote: »

7up has a massive marketing budget to convince people to drink it. The marketing behind milk and any other dairy product in Ireland is horrific. I know plenty of people who dont drink milk as they either think Dairy Farming is super cruel or that milk is full of artificial chemicals and hormones.

At a dinner one night back in the day that our marketing departments felt it correct to advertise milk with "Full Fat Milk" on the Carton. ...All it signaled to the consumer was don't buy me..

Anyway, conversation got on to Milk and it's health benefits or otherwise and I put the question to the group as to how much fat they thought was in the milk...

The answers ranged from 40 to 80%

I asked them would they buy milk if it was 96.5% fat free?

Of course they would...

rangler1 wrote:

Surely money would be better spent on education in schools than food.....there's very few hungry nowadays

"There is no finer investment for any community than putting milk into babies" - Winston Churchill

Must look up the figures but I wonder whether milk consumption went downhill when they started homogenisation.

newacc2015 wrote: »

But it is just lazy competing for market share purely on price, when most consumers dont care about the price of milk. Milk is a staple. You arent going to stop buying it as it is 85c instead of 75c

You wouldn't think that the price of milk has a big impact on willingness to buy, but it has always been an item of prime importance in the supermarket.

The reason the dairy shelves are at the back of the store is that people have to pass all the high value high margin processed foods in order to get at the bottle of milk they came in for... that is where the money is made.

Look carefully in a big supermarket with a tiled floor and you'll see that in the aisles with the highest margin goods the floor tiles are narrower than the rest of the store. People navigate their trolleys by the sound and feel of the grout line between the tiles (the bump... bump... bump...) and when the tiles get closer together they instinctively slow down, giving them more time to look at all those processed, high value, high profit margin goods the retailer wants them to buy on the way to that bottle of milk.

Using milk as a loss leader to sell a trolley full is the oldest trick in the book, but to be fair supermarkets are well able to subsidise that loss themselves without making farmers pick it up. No reason why farmers should contribute to the marketing costs of the multiples.

On the other hand - I know that in the UK at least there was some legislation discussed which attempted to restrict the use of loss leaders. It is just possible (have never looked into it) that doing this would effectively force the loss from the supermarket on to the farmer - another example of unintended consequences of well meaning legislation.

In Switzerland as a matter of corporate policy even large supermarkets carry local dairy goods (very local, i.e. the village they are in) alongside the national branded products on the shelves. I have often been told that UK stores can't do this due to logistics, but if Migros or CoOp can manage to do it 1200 metres up an Alp which is covered in six feet of snow for five months a year I really don't see why Tesco or Sainsbury can't...