Lakeland Dairies has announced a further 6c/L cut in its milk price for February supplies.
The board of the dairy business has decided to reduce the co-operative’s milk price for February due to weaker dairy market conditions, which it says is having a serious effect on market returns.
In the Republic of Ireland, Lakeland Dairies has reduced the milk price by 6c/L to 46.85c/L including VAT for milk at 3.6% fat and 3.3% protein.
The February price includes an input support payment of 1.5c/L including VAT for all suppliers.
In Northern Ireland, Lakeland Dairies has reduced the milk price by 4p/L to 38.5p/L. The February price includes a supplementary input support payment of 1.5p/L.
Lakeland said that, while markets have “firmed” somewhat over the past month, this has come from a low-level base of current prices.
According to the processor, generally weaker conditions “have continued due to higher global milk supplies and fluctuating demand from dairy buyers”.
“This is against a backdrop of economic uncertainty with ongoing inflationary pressures impacting consumer, trade, and manufacturing requirements for dairy products and ingredients,” Lakeland said.
“Overall outcomes remain unpredictable and there is continuing variability which will remain a feature of global markets for the immediate period ahead.
“Lakeland Dairies will seek constantly to maximise returns for milk suppliers and will pay as competitive a milk price as possible in line with market conditions,” the business added.
The challenged position of dairy markets is reflected in the latest Ornua Purchase Price Index (PPI) for February, which was announced last week.
The index figure for this month is 149.4, down from 162.4 for the month of January.
This converts to a milk price of 45c/L for February including VAT, down from 49.1c/L for January.
This figure accounts for estimated processing costs for Ornua’s member co-ops of 8.5c/L, but excludes any allowance for processor margins.
Ornua said in its announcement today (Wednesday, March 8) that the energy cost element of the processing cost is variable and changes each month, depending on energy costs.
The Ornua Value Payment to members for the month of February is €600,000, which equates to 1.7% of gross purchases in the month (1.3% in the year-to-date).
The decrease in the PPI, according to Ornua, is due to continued weaker returns across the product mix.