Milk Price- Please read Mod note in post #1

kowtow wrote: »

I have a feeling we will look back at this period and be grateful the price came off as quick as it did.

There's still time to make sure we get the coops we need and to influence the value chain. If we thought we had learned all there was to learn on April 1st and all we had to do was sign up and sit back then we never deserved to succeed anyway.

We produce wonderful milk on family farms in a landscape which is world renowned. Every success story has to start somewhere and that's not a bad place to begin.

If we work as hard on our supply chain as we do on our grazing then anything is possible.

Sorry Kowtow, but I only check in on boards on and again. Can I say that I find you posts to be more informative, inspirational, and sensible than anything that I have seen from the irish farmers media, from our advisory system, and from our waft of cooperatives and processors. It would be great if the industry could tap into the input from people such as yourself. I've no idea how, but it's a pity that only the relatively few on boards.ie have the opportunity of this access..
Keep posting...its brilliant..

Buford T. Justice V wrote: »

I did a bit of asking around about not having figures for wages included in farm costs.

Apparently the trade off was if they include a farm wage in the Costs Of Production, then they would also have to include the SFP in it also.

You can't have it both ways, tbf.

I totally get the logic of not including wages when comparing farms for specific purposes - or against each other on performance metrics. My first approach would always be return on investment / profit generated per ha or per €100,000 capital investment. I'd still strip out farmers wages for these purposes, but not when trying to establish cost of production or competitive advantage. There is also a powerful attachment to per/ha returns because traditionally it is the best way to choose between suitable enterprises, particularly on a mixed farm where the full time presence of labour was a given + had to be divided across multiple outputs.

But things have changed a bit with specialisation.

there is a qualitative difference between dairy farming & other enterprises. Without a full time labour unit (or a family working together day in day out to make up the equivalent of one) you don't get any milk, full stop. Unlike tillage or even beef, you can't really remove this problem by scaling down to a minimal number of cows, and when you scale up the number of full time labour units per litre sold increases in a reasonably predictable pattern. Unless you can find a part time cow, full time labour is an inherent part of dairying.

The nearest equivalent I can think of would be intensive horticulture. If you stripped out labour costs I'm not sure that the resulting figures - tens of thousands of margin per hectare, presumably - would be particularly useful, because without full time labour all you would have is salads rotting in the tunnels.

I agree that SFP poses a problem here, because it is different from farm to farm, but in a sense that is even more reason to ensure that cash costs figures aren't misused by pretending that full time farmers don't need to eat.

Buford T. Justice V wrote: »

That's the crux of the problem right there.

... But the use of those figures by those outside farming, who wouldn't necessarily know that income isn't included in the costs figure, will give an inherently biased perspective on what the total returns needed for a sustainable system, not just survival of the very, very fittest which we seem to be promoting at the minute.

Totally agree. In fact, I noticed only now that some Teagasc presentations include the specific phrase "cash costs".

But in this case, is the government & or the farming press (or the National press writing on farming matters) doing us a disservice by quoting cash costs and citing us as "able to produce milk more cheaply"... I don't see any of them mentioning that we actually produce the second most expensive milk in Europe when a wage is taken into account, as the Teagasc report does!


Perhaps the first thing we should be doing is pointing out to the farming press the danger of these misused figures.

bogman_bass wrote: »

That goes for "soft" commoditities in general does it not and will probably become more so since bio-fuels came into the mix.

Oil price is high so value of ethonol goes up.
Price of ethanol goes up so the price of corn goes up.
Price of corn goes up then the price of milk goes up.

Yes, something like that. Softs tend to move in lockstep just as currency pairs & market index futures do - in the case of the last two I could explain precisely how the arbitrage works but in commodities (forgive the pun) it's a bit chicken & egg. One of those miracles of the market which actually works for all of us - underlying it all is resource use / return on scarce capital.


As far as your medium term prediction for oil is concerned I'm not going to agree or disagree. My trading environment is very different and I spent my career working in very different timeframes - for me a position in the market for 60 seconds would be a very long exposure indeed. I find it very hard to speculate on long term / macro moves because my particular niche relies on ignoring them totally.

On the other hand the period 2007-2012 was one of enormous disturbance in all commodities and in money markets. It's an unusual base to choose for any long term commodity producing plan.

For what it's worth, I don't really buy the argument that oil goes up and up and up until it runs out. Years ago I asked the children what they though the last barrel of oil in the world would sell for - I was trying to patronise them into turning lights off or something.

"Nothing" they said "It will be in a museum".

farmerjj wrote: »

Anyone know what dairygolds milk price is going to be for july

Talks of a cent drop but they should be meeting in the next few days so we'll know then.Kerry are after dropping it 2 to 26 cent

Arrabawn 26.3 vat inc down 1.4

glanbia statements up now

kowtow wrote: »

I think if they don't talk a bounce out of the GDT tomorrow we had better hold on to our hats - it's a pity they gamed it by playing with the volume but definitely an auction to watch.

What they are trying to do is put a floor in the price to draw out any demand which has been sitting out there, reluctant to catch a falling knife. If they do manage to do this what we need to watch for is the scale and volume of trade over the next couple of auctions. We need fear of missing the low to turn into greed for the maximum savings over a longer cycle. I don't know that anyone is holding out too much hope for that.

Does anyone know what the Irish price equivalent is for $2000 WMP (which I think is the futures quote in advance of the GDT auction)?

Oil fell back quite hard to a new interim low at it's close today so not sure whether other markets will be able to make a temporary floor even if the relatively quiet little NZ milk market does!

They may do something shortly with the volume of cows being factoried their at the minute and talk of lads factoring whole herds come Xmas when milk yields start to drop their national herd is going to be decimated, alot of farmers are in the proverbial s**t out their and are taking some drastic actions

kowtow wrote: »

Does anyone know what the Irish price equivalent is for $2000 WMP (which I think is the futures quote in advance of the GDT auction)?

approx 15.5 cents. NZ futures for WMP are up well since the announcement last week that volumes are being pulled from the auction. Hopefully it will be a positive result tomorrow.

Buford T. Justice V wrote: »

That's the crux of the problem right there.

Teagasc figures are designed for use in comparisons between farms and for that purpose only. Farmers can see their costs relative to other farmers costs and see why they are higher than other farmers and how to reduce them without the whole system collapsing.

But the use of those figures by those outside farming, who wouldn't necessarily know that income isn't included in the costs figure, will give an inherently biased perspective on what the total returns needed for a sustainable system, not just survival of the very, very fittest which we seem to be promoting at the minute.

There is a huge Data Protection issue going on here also. Our discussion group have been on this with a number of years now. Data can only be used for the purpose for which it is collected. This data is only submitted by farmers for the production of cost comparisons between like minded farmers who also submit figures for that sole purpose. I feel it is illegal fro teagasc to use the figures for anything else. Illegal for use in publications, illegal for distribution to coops and industry, illegal for use by government. It is solely for the use of cost comparison between the farmers who submit the figures.
We have an agreement from our advisor that our figures go no further in the system than for the use of our individual discussion group. We trust that this is adhered to but have no way of knowing. To make the figures realistic each member puts in a figure of 40k per family work unit, not unreasonable because that's what you would have to pay to replace you.
I'm also involved in a European cost comparison group, where your own input is factored in as a costeo at 15 euros per hour, and your land is costed in at the same rate as the land rent in your area.
That leads to some interesting conclusions. It is the realistic measure of the cost of producing milk. I can tell that at under 35c/l Irish farmers are subsidising milk price through free labour, free land, free depreciation....of course you can keep going for quiet some time without paying for the above...but no other right minded industry would.