Belfast Telegraph

Balmoral Show: Dairy producers hopeful weak milk market will turn

By Richard Halleron

Most dairy farmers attending the first day of Balmoral Show already knew they were losing money before entering the showgrounds, but their visit would have provided them with a degree of hope over the future of their sector.

The Ulster Farmers' Union (UFU) says milk producers need a price around 27-28p per litre to break even at the present time.

And given the state of the milk market, this means dairy farmers are running their businesses at a loss to the tune of around 7p/L.

"Economics dictate that every dairy farming business in Northern Ireland is under severe financial pressure at present," said UFU director general Wesley Aston.

"But the medium to long-term prospects remain extremely positive. The question is, when will international markets start to turn? This really is the great unknown."

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Aston pointed out that the UFU was currently talking with the banks to ensure that the financial support milk producers need is made available to them.

"The banks must be totally transparent in the way they deal with farmer clients," he added. "We thought the milk market had turned a few weeks ago, given the strengthening returns of the Fonterra's Global Dairy Trade auction at that time, but this turned out to be a false dawn."

Meanwhile, Lakeland Dairies chief executive Michael Hanley said that international demand for dairy products was continuing to strengthen. "But global milk output is simply outstripping the requirements of the market at the present time," he said.

"It may well be six months before returns in Northern Ireland start to strengthen. The reality is that milk production continues to increase in Europe, New Zealand and the United States. While this continues, market prices will remain under pressure.

"We saw an upturn in prices paid at Fonterra's Global Dairy Trade auction during early of 2015. This reflected the belief that drought could have a downward impact on New Zealand milk output at that time. However, this failed to materialise."

But despite the current decline in dairy markets, Hanley is not advising Lakeland suppliers to cut back on milk output.

"The very opposite is the case," he stressed. "We are committed to expanding our milk pool. We have a market for every drop of milk that we process, and I am totally confident of this remaining the case as our output levels increase.

"But the reality is that we are selling a product onto a market that is considerably weaker than was the case a number of months ago."

Further reading:

Balmoral Show: DUP leader accuses Sinn Fein as traffic chaos sparks political row

Balmoral Show: The singing alpacas that even watch Coronation Street

Balmoral Show: Winning Charolais is the darling of proud Connolly clan

Balmoral Show: Sun shines as country folk put on a real show

Lady Maria's class tells as the Balmoral Show gets off to flyer  

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