Cantillon: Life after milk quotas turns sour for farmers

Constraints on demand have catapulted dairy sector into worst slump in a decade

According to the Irish Farmers’ Association, average milk prices here have fallen by 33 per cent to 28 cent per litre in the past 18 months.

According to the Irish Farmers’ Association, average milk prices here have fallen by 33 per cent to 28 cent per litre in the past 18 months.

 

Is the milk price rout finally coming to an end? The main global bellwethers are sending out mixed signals.

According to data from the Milk Market Observatory, milk prices across the EU rose in September for the first time in 14 months. However, this was undercut by preliminary estimates for October which pointed to another fall.

The last two Global Dairy Trade auctions – which set the main reference price for products internationally – have also posted declines.

A sequence of four straight price rises in these auctions in August and September had been proffered as evidence the market was finally bottoming out. The post-quota era – billed as a great boon for Irish dairy farmers – has turned sour.

Constraints on demand from larger dairy buyers linked to a slowdown in China and an import ban in Russia have catapulted the sector into the worst slump in a decade.

According to the Irish Farmers’ Association, average milk prices here have fallen by 33 per cent to 28 cent per litre in the past 18 months.

The IFA claims this represents a whopping 93 per cent decline in margins for farmers.

Farmers have spent the last two years ramping up production ahead of the ending of milk quotas.

Encouraged by Government and China’s great white gold rush, they’ve expanded herd numbers and taken on more debt.

With agricultural commissioner Phil Hogan adamant there will no return to protectionism, the big question is how long the sector can soak up these price reversals.

The Irish Creamery Milk Suppliers’ Association is predicting incomes swing of up to €40,000 between this year and last – enough, they say, to drive many out of business. This is proving a major a headache for Fine Gael, whose core constituency stretches perfectly across the Munster dairy belt.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.