EMB Newsletter September 2017
Dear dairy farmers and interested parties,
Prices are rising, dairy farmers are back on track - This is the tone of articles currently doing the rounds in the European press.
However, as the latest EMB milk price comparison shows, farm-gate prices paid by European dairies have, in fact, hardly changed and have continued to languish in an all-too-slow upward trend over the last four months. In light of this sluggish price rise, it is in no way justified, from a producer point of view, to say that the dairy crisis has ended. It would also be short-sighted to believe that the market will correct itself and farm-gate prices will thus reach a cost-covering level. Over 350,000 tonnes of skimmed milk powder are currently in public storage and will exert pressure on the milk price sooner or later. The EMB has already made it clear to Agriculture Commission Hogan that this intervention milk powder cannot come back to haunt dairy farmers. German milk producers are currently staging a number of milk powder demonstrations against intervention as it is a "crisis instrument gone wrong". You can read more on the background for these demonstrations in this issue.
The market situation in Italy has brought about a slight recovery in farm-gate milk prices in the last six months, rising from 34/35 cents in February to 38/39 cents in August 2017. Production has remained on a par with 2016 levels, albeit with a decrease in July and August as a result of the severe heat in the north and south of the country. Cheese prices have stagnated, especially for matured cheese varieties like Grana Padano, currently fetching low prices on the level of 2016. The spot market price for milk has risen sharply, from 36/38 cents in June to nearly 45 cents in August. Forecasts predict stable production until late autumn, with a decrease conceivable in view of the severe heat in the summer. Prices paid to producers in the market with direct contracts (not spot prices) are said to rise to over 40 cents from September/October. The long period of drought and the severe heat have resulted in increases in the cost of raw materials such as corn and hay, driving up production costs. At present the average production costs of milk in the north of Italy are 46 cents...
The aim of the European Milk Board is to achieve cost-covering prices for Europe's dairy farmers. Temporary production cuts, as proposed in our Market Responsibility Programme, allow for price recovery and thus liquidity on our farms during crises.
Roberto Cavaliere, EMB Board member and president of APL Italy