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Milk Price- Please read Mod note in post #1

delaval

24/6/16

Recently we saw three posters close their accounts over disagreements in the dairy threads. While there is a lot of frustration and discontent with current milk prices and the processing industry, the recent tendency for dairy threads to become tit-for-tat arguments isn’t tolerable for those not involved.

All farming sectors go through difficult periods and during such times there may need to be changes in how threads are moderated.

Dairy threads are going to be more closely monitored and subject to stricter moderation for a while.

To that end we won’t tolerate baiting of posters, constantly reviving old arguments, posters with agendas or crusading for a cause.

Whether it’s discussion of the business or politics of the dairy or other sectors, we expect civility and tolerance toward each other and other opinions as diversity of opinion is needed as a source of different ways of looking at a situation.

"The aim of argument, or of discussion, should not be victory, but progress." - Joseph Joubert

Also please be aware that what you may post as light-hearted banter can be read totally differently by someone adversely affected by the subject matter and evoke a reaction you hadn’t intended.

The ‘Off-Season’ forum, and its anonymous posting, is available for anyone to chat about their situation.

The Mod Team.

I was wondering would it be a help if we posted our milk prices. I would hope that if someone is low that help could be given, on the other hand if high perhaps your tips could help us all.

I would suggest posting your processors base inc Vat for comparison
Post your Nett price for others to help or be helped
I think that solids should be included.
I suggest any seasonal/liquid contract price be excluded or seperated.

I feel that we as farmers do a lot of bitching about processor prices and rightly so IMO. I also feel that we should not worry about it as we can do nothing about base price but we certainly do something about it at farm level.

What do you all think?

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Dawggone

frazzledhome wrote: »

Just because I'm paid the most doesn't mean I'm the highest earner

True.

kevthegaff

Clicked on the first page of this thread very depressing reading compared to the last ten pages here!

Dawggone

frazzledhome wrote: »

I'm actually getting the vibes from 1 that he's not coming back on the spring. He's with us 10 yrs and things are good for him so its not too bad. Will be hard to replace him nonetheless

Jeezuz I'm in turmoil here with staff Atm.
Between injuries and health problems I'm working harder than ever..
Slowly building a team again.

18MonthsaSlave

If I'm paying between 51 and 55 cent for a litre of milk in Germany how can Tesco be charging 75cent according to their website. Are the dairies and the supermarkets looking after themselves?

kowtow

RightTurnClyde wrote: »

Kowtow, is this the bust, or the prelude to the bust ( or has the bust even started)

I honestly don't know - I don't actually think we are as exposed (yet) as a country as we might be if quotas had gone earlier. Also price could yet go up or down in the short term... only debt can make us go bust at this point.

But I do think that the sooner we stop talking about New Zealand the better; I suspect they are much better able to tolerate the highly volatile powder market (where price is in effect set by the the surplus / deficit of everyone else's liquid milk supply) than we are.

Like New Zealand, we are price takers - because there is no market to speak of for our liquid milk. But they have control of their currency, and they operate in their own regulatory environment. We don't.

We do have a brilliant image, history, world profile and some fantastic products.

Our farms are very unlikely to go bust if they stay close to their present size - although we might eat a lot of cornflakes. We just have to try and make sure the co-ops don't charge us too much for the cornflakes.

In short, I'm not sure there is really such a thing as a global dairy market. There is liquid milk, and cheese, and butter - primary products - and then there is what to do with the leftovers. And the leftovers will always be the most volatile sector price-wise.

I'm not sure producing the most competitive leftovers in the world (provided we go without wages) is a good business plan.

cute geoge

Does it really matter whether our milk goes to produce infant formula .cheese or butter all we are ever going to be paid is the world market price.
It is sad to see the uk famers under such financial pressure when they have such a ready market for their products but at least its reassuring to know know you cant go broke if you have no borrowings no matter how low the price of milk goes

djmc

cute geoge wrote: »

Does it really matter whether our milk goes to produce infant formula .cheese or butter all we are ever going to be paid is the world market price.
It is sad to see the uk famers under such financial pressure when they have such a ready market for their products but at least its reassuring to know know you cant go broke if you have no borrowings no matter how low the price of milk goes

When we are selling a product for less than it costs to produce for long enough we can all go broke eventually borrowings or not.

Buford T. Justice XIX

18MonthsaSlave wrote: »

If I'm paying between 51 and 55 cent for a litre of milk in Germany how can Tesco be charging 75cent according to their website. Are the dairies and the supermarkets looking after themselves?

The only thing supermarkets do here is supply space and collect money. The fridges and cooling and stocking and removal of out of date product is carried out by the milk processor.

For that, they get a third of the retail price and 3 months interest free credit.

And still we are told the supermarkets don't have too much power.

jaymla627

Carbery holding at 29.5 for august and promising to hold for September, hopefully will draw a line under the 25 cent a litre glanbia are paying, their will be alot of glanbia suppliers making noise if they drop September milk

jaymla627

mahoney_j

jaymla627 wrote: »

Carbery holding at 29.5 for august and promising to hold for September, hopefully will draw a line under the 25 cent a litre glanbia are paying, their will be alot of glanbia suppliers making noise if they have another price drop on September milk.....

Hats off to them ,Glanbia ,Arrabawn et all stand up and take note

Milked out

jaymla627 wrote: »

Carbery holding at 29.5 for august and promising to hold for September, hopefully will draw a line under the 25 cent a litre glanbia are paying, their will be alot of glanbia suppliers making noise if they have another price drop on September milk.....

Dg better hold so, 2.5c back on the neighbours as is...

mahoney_j

mahoney_j wrote: »

Hats off to them ,Glanbia ,Arrabawn et all stand up and take note

The fact there holding at such a high level beggars the question ,how can a huge organisation like Glanbia with their big shiny processing plants etc etc be over 4 cent a Ltre behind a small coop in west cork .im a long suffering Arrabawn supplier but if I was a Glanbia supplier currently I'd be asking major questions of my board

Milked out

mahoney_j wrote: »

The fact there holding at such a high level beggars the question ,how can a huge organisation like Glanbia with their big shiny processing plants etc etc be over 4 cent a Ltre behind a small coop in west cork .im a long suffering Arrabawn supplier but if I was a Glanbia supplier currently I'd be asking major questions of my board

Afaik there other businesses are doing well, synergy in the us are flavours I think and are going well so they may well be propping up the price for dairy side of the business and carbery are in Brazil as well. They have a good product mix as well in carbery. One of the lads West along may confirm that. Closer to ballineen than any dg plant myself

20silkcut

mahoney_j wrote: »

The fact there holding at such a high level beggars the question ,how can a huge organisation like Glanbia with their big shiny processing plants etc etc be over 4 cent a Ltre behind a small coop in west cork .im a long suffering Arrabawn supplier but if I was a Glanbia supplier currently I'd be asking major questions of my board

Kk motherf**kers what do you expect?

kowtow

mahoney_j wrote:

The fact there holding at such a high level beggars the question ,how can a huge organisation like Glanbia with their big shiny processing plants etc etc be over 4 cent a Ltre behind a small coop in west cork .im a long suffering Arrabawn supplier but if I was a Glanbia supplier currently I'd be asking major questions of my board

Exactly.

In this case presumably it's carbery selling into the cheese market underpinning price. Primary products rather than powdery products?

Could be worse .. we could all have been merged into 1 big shiny one!

Milked out

mahoney_j wrote: »

The fact there holding at such a high level beggars the question ,how can a huge organisation like Glanbia with their big shiny processing plants etc etc be over 4 cent a Ltre behind a small coop in west cork .im a long suffering Arrabawn supplier but if I was a Glanbia supplier currently I'd be asking major questions of my board

kowtow

I wonder did Glanbia forget to hedge out or sell forward the milk they took on at fixed prices?

Also: do they dry powder for the UK?

mf240

Glanbia have the majority of lads sighned up for five years. So they dont give a sh1t. They know theyll get the milk anyway.

Theyll probably do like finna fail and start behaving a bit better for a few months when the contracts come up for renewal.

kevthegaff

mahoney_j wrote: »

Hats off to them ,Glanbia ,Arrabawn et all stand up and take note

What are arrabawn paying j?

Greengrass1

http://www.irishfarmersmonthly.com/dairy

Always worth reading what matt ryan writes

Greengrass1

Greengrass1 wrote: »

http://www.irishfarmersmonthly.com/dairy

Always worth reading what matt ryan writes

These are definitely worth a read too lads

kowtow

As far as predicting the milk price is concerned - one thing is abundantly clear, and NZ is just as much a price taker as we are.

The global milk price (i.e. the powder / GDT price) is the baseline Ireland falls back on. Other countries in Europe will get better prices because their product mix includes a local liquid milk price. The more we export as commodity milk the closer we come to NZ prices (95% of NZ milk is commodity milk).

The NZ / Commodity milk price - the powder price - is basically always going to be a function of the price of the least profitable litres of milk produced by American producers. That's why it is notable that the feed / price ratio is consistently close to 1 - 1.5 in powder producers like New Zealand, Uganda, Cameroon and presumably a post-quota Ireland, whereas in Germany, Italy, UK, and the US it is higher for large periods of the cycle.

Other countries don't feed cows because they are stupid, they feed cows because it is profitable. We don't avoid feed because we are clever, it's because in the markets we produce for (the global surplus market) milk is only ever worth the price of a bag of feed. If it was worth more, America and others would produce more, and if it was worth less, America and other countries would cut production sharply.

It's not the abundant grass that make NZ & Ireland pasture based, it's the lack of a liquid milk market which means it's the only thing we can afford to do.

The correlation between global feed prices & oil is pretty consistent, so if you want to know what the 6 - 18 month price outlook is that's the place to look. What's more, unless Ireland really can change the product mix and move up the value chain, there are good reasons to believe that the global price of feed will always be very close to the price of Irish milk.

Timmaay

So Kowtow basically we need to get use of a milk price between 18 and 30 cent/l....

Dawggone

kowtow wrote: »

It's not the abundant grass that make NZ & Ireland pasture based, it's the lack of a liquid milk market which means it's the only thing we can afford to do.

Very true. Then again that's the message that the industry want to send to the markets - Ireland has invested hugely in producing into this commodity, AND, the farmers are commited to stick with it, no matter what...

Good business plan?

kowtow

Timmaay wrote: »

So Kowtow basically we need to get use of a milk price between 18 and 30 cent/l....

Who knows? the one thing that is clear is that the NZ & Ireland phenomenon has emerged since about 2005/6. Until then SMP was low price and stable (I think) but factory cheese had the wild volatility.

Since 2005/6 we've had a peaking commodity cycle, peak oil, global turbulence.. and China emerging. SMP has become volatile and cheese has become more stable. Has SMP replaced factory cheese for storing excess milk?

I'd like to see, or do, a lot more analysis of the ratio between powder price and feed, but it IS striking on the face of it that New Zealand and the African countries share this low positive ratio. The obvious explanation is that when it's profitable to produce lots of milk from feed, the world does, until milk = feed and then only Ireland & NZ can make a living (and a pretty volatile living it is..)

It's really simple logic if you think about it. If you are a UK farmer with a (theoretically) expandable intensive high yield herd, you'll milk until the milk can only be sold for the feed price. By definition this won't happen until the liquid litres in your local market are already over-supplied, so the surplus milk will be finding it's way to factory cheese or SMP. Everyone else in the world will be doing the same.

I'm not sure that any of this is surprising, in fact in many ways it's obvious - but it shows how much we really are depending on "moving up the value chain".

I think as farmers we need to look hard at the processors / co-ops as well as the National brands and plans. For example - are multi-national food businesses really here because they love Irish milk or is it because Irish farmers are prepared to pay to build them a drying plant and work for nothing to fill it. I'm being a bit tongue in cheek and cruel here, but what I am really saying is that the processor chain is our last chance to get this right and capture the quality premium of Irish milk and we better not make a balls of it for our own sakes.

whelan2

There's an article in todays business part of the sunday indo, apparently the average borrowings of irish dairy farmers is 62,000 euro while the average new zealand farmer has borrowings of 4million euro:eek:

Milked out

whelan2 wrote: »

There's an article in todays business part of the sunday indo, apparently the average borrowings of irish dairy farmers is 62,000 euro while the average new zealand farmer has borrowings of 4million euro:eek:

The difference in average herd size would be a part of the reason also when its a more fluid industry over there in terms of setting up and moving farms etc there is bound to be more borrowing in that environment.

farmerjj

whelan2 wrote: »

There's an article in todays business part of the sunday indo, apparently the average borrowings of irish dairy farmers is 62,000 euro while the average new zealand farmer has borrowings of 4million euro:eek:

Always wondered why Teagasc and co keep comparing us to new Zealand, I sure wouldn't like to follow them down there road of high borrowing ,maybe its time we try and do something right ourselves and not follow some other countries flawed example

mahoney_j

farmerjj wrote: »

Always wondered why Teagasc and co keep comparing us to new Zealand, I sure wouldn't like to follow them down there road of high borrowing ,maybe its time we try and do something right ourselves and not follow some other countries flawed example

The major loans there are for land and stock ,we've not the same chance to squire large land blocks here and more is spent on yards ,parlours,cubicles slurry storage and other things dept and environmental regulations require us to