Poor dairy prices point to falling profits

- Last updated on GMT

Related tags: Milk, Irish dairy board

In Ireland weak dairy prices are pointing to falling profits for
the Irish Dairy Board this year, even though the company sales are
up.

In Ireland weak dairy prices are pointing to falling profits for the Irish Dairy Board this year, even though the company grew sales in all of its major markets over the course of the last year.

According to managing director Dr Noel Cawley the industry would benefit from a 5per cent increase on commodity prices next year, although industry analysts believe the arrival of new members into the EU will have a depressing effect on prices during 2003.

According to a report in the Irish Independent, the analysts opinion is is not shared by Dr Cawley, who believes that new members to the Irish dairy industry are not yet in a position to challenge on the export front.

The board also noted that market prices for butter and skim milk powder in Ireland remained at or below intervention levels for the key production months this year, while returns for cheese and acid casein were below the intervention equivalent.One unexpected problem this year was that peak milk production throughout the EU was higher than expected, which in turn had resulted in more butter and skim milk powder production across the Community, leading to a rise in sales to intervention.

Dr Cawley also said that the decision by the European Commission to reduce export refunds has restricted any further improvement in returns within the EU and created uncertainty about the sustainability of a recovery in the immediate future.

Despite improvement in its US, Continental and UK business arms the board looks unlikely to improve on last year's results. He also warned that there is likely to be some fluctuation in prices over the early months of 2003.

On the plus side, a significant rise in the Board's sales of non-core food products into the US did make the outlook seem a little rosier. Currently, it is selling some $20 million (€19.4m) worth of Irish-sourced food products in the US.

Related topics: Manufacturers, Pricing Pressures

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