Dairy Markets Still in the Doldrums

There was more bad news on the economic front recently for dairy farmers around the world, with the markets still refusing to pick up.

More companies have cut the farmgate price they pay to dairy farmers once again, including Arla, First Milk and Fonterra.

This week's Global Dairy Trade (GDT) auction saw a further fall of 7.4 per cent in the GDT Price Index from the previous event.

This is the third event in a row that dairy prices have fallen.

The UK’s NFU called the downward price slide a ‘ruthless price war’ and said the inevitable result would be a large number of dairy farmers leaving the industry.

The organisation agreed with New Zealand’s levy board DairyNZ and Fonterra chiefs that global supplies are still large and still growing, particularly in Europe.

On the demand side, Fonterra's Chairman John Wilson said global economic conditions continue to be challenging and are impacting demand for a range of commodities, including dairy.

“Key factors driving dairy demand are declining international oil prices which have weakened the spending power of countries reliant on oil revenues, economic uncertainty in developing economies and a slow recovery of dairy imports into China. In addition, the Russian ban on European Union dairy imports continues to push more product on to the world market.”

DairyNZ chief executive Tim Mackle said the industry will be doing its best to provide support, building on what has already been done. The organisation is providing a variety of support measures, including workshops and trained professionals to help farmers under pressure.

NFU dairy board chairman Rob Harrison urged farmers to stay in touch with their banks and accountants, and called on processors to be honest with producers and give adequate notice of any changes.

He also suggested that other processors could put in place measures like Dutch milk co-operative Friesland Campina, where farmers are paid a small premium if they maintain or reduce the volumes of milk they produce.

“What we need more than anything is for all processors to actually talk to their suppliers and discuss the options available for both parties," he said.

Meanwhile in Europe, the European Milk Board (EMB) recently attended an audience with the Pope in the Vatican to ask for his support in the midst of the crisis.

Roberto Cavaliere, from EMB member organisation APL Italy, said he was impressed after speaking with the head of the Catholic Church: "Pope Francis takes a firm stand against abuse. We must also continue this uncomfortable struggle with the same fighting spirit. We need better underlying conditions for the dairy market, so that we and our families can have a future and sustainable agriculture becomes possible."