UFU Questions Milk Auction System

IRELAND - The Ulster Farmers’ Union says the low average price at yesterday’s milk auction raises questions as to whether the best possible return is being achieved for producers through the current Northern Ireland milk auction system.
calendar icon 27 January 2009
clock icon 2 minute read

UFU Chief Executive Clarke Black said it was time to seriously analyse if the current auction system was maximising returns to farmers. He said; "This is a critical period for dairy farmers and every penny per litre counts. We estimate an intervention price of approximately 18.5 pence per litre, yet some bids this week were actually lower than this and the overall average price at the auction has ended on a par with intervention.

We acknowledge that the Northern Ireland dairy sectors product mix is weighted towards powders, but we do nevertheless have a range of products including liquid milk, cheese, yoghurts and so on. Some of these markets which processors are operating in, are significantly better than intervention, so should the auction price not reflect this and should it not have delivered a better price than 18.5 pence per litre this week?"

Prices bid at this weeks Northern Ireland milk auction ranged from 17.9 pence per litre to 20.1 pence per litre, a difference of 2.2 pence. In December 2008, the range of bids at the milk auction was only 16.1 to 16.9 pence per litre.

Clarke Black added; "At this weeks auction, some buyers were prepared to pay 20.1pence per litre, which is 1.6 pence per litre higher than the final average milk price figure. This poses the question; are the range of market opportunities being fully reflected? For example retail liquid milk prices remain high, but this doesn’t seem to be coming through at all in the auction. Instead we seem to end up with 'lowest common denominator' prices every month at the auction".

The UFU has written to United Dairy Farmers seeking a breakdown of the bids at this weeks milk auction. Clarke Black said; "The milk auction price is still considerably below the cost of production and this means continued losses for the Northern Ireland Dairy industry. We must look at all the options to try and improve the returns to producers"

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