Milk Price- Please read Mod note in post #1

The good news is that according to Teagasc we're only going to need *some* free labour in the future, when milk prices recover.

If this herd increased to 80-120 cows the farm would need an additional full unit of labour (50% family 50% paid).

http://www.agriland.ie/farming-news/average-dairy-herd-to-grow-by-33-cows-extra-labour-needed-for-dairy-farms/

Can't believe that we actually base a national business plan on free labour. In any other industry it would be an April Fool.

Imo 70/80 cows is more then enough cows for one man to manage ,i think price volatility is going to have a big impact on any expansion ,as wages are the biggest cost in any business ,i cant see the point in expanding unless a person wants to make a slave of themselves.

cute geoge wrote: »

i cant see the point in expanding unless a person wants to make a slave of themselves.

I think the point is that for the grand "Irish milk plan" to take place they need to make a slave of someone else as well.

Unless you can still buy them, that is.

Milked out wrote: »

Have they even done a survey on family labour available to farmers? Every farm would be different with some having the previous generation around others having the next and plenty with none at all. Obviously whether it's there or not isn't the point as the business should be able to pay for the labour required but still id imagine tgere are alot of farms where family labour isn't there or family isnt used at all

Their really overestimating the % of farmers/sons daughters who actually have a active interest in the farm and would even consider making a career from it, have 4 brothers here aged 16-26 and not one can milk a cow our even have the slightest inclination of farming.
In 15 years time the farming landscape will be mainly composed of a large majority of farmers aged 60 plus on their last legs with not a whole lot of young people coming through to take the reins, and how could you blame them...

Dawggone wrote: »

Does anybody know if Fonterra are stockpiling or finding another market for the 100k tons of product that is being withdrawn from the gdt auction?

I suspect you need to look carefully at the purchase volume over the next couple of events relative to last year.

If they are simply moving it through other outlets, there ought to be reduced buyers as well as reduced sales volume - since they are getting the product from Fonterra anyway through other channels. If they are stockpiling it won't be obvious yet but the buy volume would be pretty consistent. Very difficult to see through that kind of process without knowing the auction intimately.

The number I'd be interested in is the approximately Irish milk price equivalent of the Fonterra number. There was a Dail session early in the year where IDB (I think) gave an Irish milk price equivalent of 20 or 21c for the Fonterra price at the time. I will try and find the context as not sure whether it came before or after the little volume-manipulation-bounce in the GDT after the turn of the year.

Understanding that equivalent would be helpful especially given the state of the currency markets.

So the quote from the Irish Dairy Board in the Dail on 15th January was

Milk output has continued its momentum into 2015 despite the downward sentiment and some downward impact on prices. Milk prices in the EU and Ireland today have not reflected where markets are at for a number of reasons. Today, the global dairy trade auction run by Fonterra from New Zealand would return a price for Irish milk in cent per litre terms of just over 20 cent. Today, milk prices in Ireland are approximately 30 cent. Spot milk, if one is unlucky and does not have a customer or contract for it in the EU, is 24 to 25 cent. Milk output in Ireland and through much of the EU continues to be quite strong because milk prices to farmers are not at those spot levels - the global dairy trade levels - yet. Many of us, including IDB, have a market strategy which has allowed us to deliver better returns to farmers than the spot market, as I will go on to outline.

The GDT price index in the first week of January was 784 I think, if that is the GDT result he had in mind. The same price index is 590 today even after the recent bounce in the GDT. Based on his 20c / litre figure does that suggest that today's bottom line NZ spot price in Irish terms is actually 25% less? 15c / litre? - obviously notwithstanding value add, currency moves, also perhaps milk composition detail.

Or simply the market correcting itself. Survival of the fittest from now on.

frazzledhome wrote: »

Life's a funny thing, very little action on this thread all last year and before while price was high.

Very little about how dis functional our industry is and how badly were structured a farm level.

Price falls and all is not well at any level, really begs the question of how good the commentary and analysts are here.

Those of us preaching minimal capx spend on farm aside from compliance may actually have been correct all along.

When your making money remember how hard earned it was and hold on to it till you can invest wisely.

That's all

Couldn't agree more.

There is a pre-disposition in this country to not seeing both sides of a coin. In the nicest possible way (probably because we are the nicest possible people) our optimism sometimes crosses a line to groupthink.

I notice, for example, the following quote from the IFA, in which O Leary condemns those who "talk down" milk prices with negative commentary and then cites a single forecast as "proof" that the market has bottomed and prices are on the way up.

He said there was no denying just how difficult international dairy markets had become, but recent New Zealand futures prices and last week’s Global Dairy Trade (GDT) results are proof they were now bottoming out.

“Talking down milk prices, which some would justify as a means of informing or conditioning farmers, is ill-advised in a world of global and instant communication and could damage the better market sentiment justified by recent market developments.

“It also runs contrary to some of the commentary from New Zealand’s ASB Bank, which expects New Zealand 2015/2016 milk prices to lift by 30% over the current forecast.

Some of the same people who are predicting record low milk prices over the next six to nine months were also anticipating dismal prices in late 2014, failing totally to predict last spring’s uplift.

“Their comments will be picked up online and through social media all over the world as instantly as we learn the results of GDT auctions,” he said.

http://www.agriland.ie/farming-news/talking-down-2016-milk-prices-is-ill-advised-and-damaging-ifa/