Experts predict recovery in milk price

ECONOMIC EXPERTS have predicted a gradual recovery in the dairy industry in a report published on the closing day of the National…

ECONOMIC EXPERTS have predicted a gradual recovery in the dairy industry in a report published on the closing day of the National Ploughing Championships.

The report, published by Teagasc, was produced by a committee of dairy industry stakeholders and experts and chaired by UCC economist Dr Michael Keane. It examines the origins of the current crisis and looks at the milk production and dairy consumption prospects in the major regions around the world over the next five years.

The director of Teagasc, Prof Gerry Boyle, said this review of global dairy markets provided a valuable guide to market prospects and highlighted the factors that have contributed to the current market difficulties and identified their relative importance.

“The global recession, weak dairy product consumption growth and a strong expansion in global milk production are found to be the key factors behind the fall in prices,” he said .

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Economist Trevor Donnellan of Teagasc’s rural economy research centre said the review had been completed at a time of major concern for the Irish dairy industry, arising primarily from exceptionally low dairy product and milk prices.

“Irish dairy farmers received over 32 cent per litre for their milk in 2008 and are likely to receive, on average, less than 23 cent per litre in 2009, a decline of almost 30 per cent. As a direct result, many Irish dairy farmers will lose money this year.”

The report says that, globally, milk production has been slow to adjust to the low price level. However, there are now signs that production is falling in some major milk-producing regions. As the global economy emerges from the recession, a recovery in demand will also contribute to improved dairy prices.

The Irish Farmers’ Association’s dairy committee chairman Richard Kennedy said the current trends were definitely signs of a faster recovery than anyone expected even a few weeks ago.

Mr Kennedy said with production well back and intense cash-flow pressure continuing on dairy family farms, co-ops must shore up farmer confidence by paying a stronger price in coming months.

It was also announced at the championship that the Western Development Commission (WDC) has secured EU funding of €1 million to develop the wood energy sector in the west.

The funding, announced by Minister for Community, Rural and Gaeltacht Affairs Éamon Ó Cuív, will support farmers, rural enterprises and rural communities to expand the wood-heat sector.

“I welcome this funding to help develop the wood-energy sector. Part of the WDC’s work is to ensure that the western region captures the value of its abundant natural resources, and the renewable energy sector is a key area for economic growth,” said Mr Ó Cuív.