Don’t miss this month’s new look Dairy Farmer. Take a look at the digital edition today.
Whatever you may think of the outcome of the referendum, there is a certain irony in the fact that the EU has just announced it will plough nigh on €1bn into agriculture, of which a gradely chunk will go to the dairy sector.
Perhaps more ironic still is the fact that part of the rescue package is to be targeted at an incentive for restricting volumes, which should make processors sit up even more as they will already have one eye on EU production and its current decline.
As confirmation of those glimmers of light at the end of this seemingly never ending tunnel, buyers are starting to cancel proposed summer price cuts and even more reassuringly some are upping their price which will be nothing short of a life saver for many.
But there is little doubt processors here won’t want any cutback in volume, as some are already on red alert after seeing June figures down a whopping 10% on last year. And as prices firm, some producers will have seen their spot price B allocation surreptitiously merged into their A. There are even tales of some processors penalising producers for not actually sending in enough.
Which is extraordinary by any stretch of the imagination. The message seems to be overproduce as this last winter when there is nowhere to place the stuff, and we’ll cane you, and under produce now as things are tightening and we’ll still cane you.
What it all boils down to is that delicate supply-and-demand balance, and after suffering the consequences of oversupply we all have great expectations from seeing what the other side of the coin looks like.
The worrying thing is that some producers seem to be gearing up already for better times with cow prices on the rise, and there is a danger that production could easily see-saw back again, taking prices with it, before we ever glimpse those sunny heights!