Cavan-headquartered co-operative, Lakeland Dairies, has warned that there’s more likely to be a “vital” correction on milk value within the coming months.
The co-op has highlighted to suppliers that previously variety of months dairy markets have “weakened considerably” with butter and skim milk powder (SMP) presently sitting at round 40% decrease than they have been in September 2022.
In its newest correspondence it pledged to “maximise the return” to members nevertheless it additionally sounded a cautionary observe about market pressures at the moment.
The co-op informed suppliers that it is vitally conscious that any motion on milk costs can have a serious impression on farm households as inflation-driven enter prices proceed to create vital challenges.
In an announcement to Agriland, the Cavan headquartered co-operative mentioned:
“Lakeland Dairies is constant to watch market developments and is retaining milk suppliers up to date on an ongoing foundation.
“The milk value is set by the board of the co-operative on a month-to-month foundation taking all accessible data into consideration.”
Earlier this 12 months the co-op had additionally sounded a observe of warning to its members when it confirmed that it had maintained the milk value for December.
It mentioned final month that “markets have weakened very significantly all through the previous quarter”.
“Financial circumstances worldwide stay unsure and shopper spending energy is more and more compromised by inflation and cost-of-living circumstances, with persevering with results on shopping for patterns,” it warned.
Farmer-owned Lakeland Dairies collects an estimated two billion litres of milk from 3,200 farm households throughout 16 counties throughout the island of Eire.
The co-op produces a variety of dairy meals components, foodservice and shopper merchandise, that are exported to greater than 80 international locations worldwide.
The stark warning from Lakeland Dairies to suppliers a couple of milk value correction on the playing cards comes in opposition to the backdrop of numerous indicators that present a decline in dairy commodity costs in Europe.
Teagasc has additionally beforehand highlighted that “an distinctive provide and demand state of affairs in 2022 resulted in terribly excessive milk costs”.
In its latest Financial Outlook for Irish Agriculture report it highlighted that within the context of European milk costs Eire had recorded among the highest will increase throughout the European Union.
However Teagasc warned final December that the dairy market in 2023 would most probably expertise “an easing of worldwide demand progress and higher international milk availability on the provision aspect.”
“Whereas dairy commodity costs moved upwards over most of 2022, there have been already indicators in Quarter 4 of 2022 that costs had moved previous their peak,” it said.
Teagasc famous final December that costs for butter and milk powders had slipped.
It had additionally indicated that as a result of the “Irish milk value benefitted disproportionately from the buoyant worldwide dairy market in 2022” , it was seemingly that the Irish milk value would “additionally really feel a disproportionate impression from the autumn in worldwide dairy commodity costs in 2023”.
Teagasc has forecast that the annual common Irish milk value in 2023 “will likely be down 15 % on the 2022 stage”.