The price of milk is falling all across the EU, according to LTO-Netherland's monthly report. French, Dutch and UK dairies are all cutting milk prices although Müller are the only German company to do so.

The average EU milk price for March was 33.72 euros per 100 kilograms of milk. While this is a 3.3 per cent decrease on February's price it is still 0.8 per cent higher than March 2011.

LTO report that “The main factors responsible for the current direction of the market are increases in milk production exceeding expectations and lagging export demand to absorb these extra supplies.”

This may be bad news for farmers as The Dairy Group have forecast high production costs for the near future, at least in the UK.

EU Milk Prices Slid in March as Output Climbed, LTO Says
Rudy Ruitenberg, Bloomberg, 4 May 2012

Costs are making average dairy margins wafer thin
Farmers Guardian, 4 May 2012

Arla, Müller and Wiseman (now owned by Müller) have all followed Dairy Crest in dropping their farmgate milk price by 2 pence per litre.

Arla aligned producers will now be paid 27.5 pence per litre, while non-aligned producers will receive 27 pence per litre. Wiseman's standard milk price will be reduced to 26.42 pence per litre, while Müller would not confirm their current price beyond the price cut of 2 pence per litres. Dairy Crest who led the pack are now paying 26.61 pence per litre.

Wiseman said that "the collapse in bulk cream value" and a "competitive environment" has forced them into this position. National Farmers Union chief dairy advisor, Rob Newberry, has said that the union is "very angry" and "disapointed" at seeing farmers "treated as a herd when it comes to the rewards”.

Müller and Arla next to slash farmgate milk price
Julia Glotz, The Grocer, 3 May 2012

Robert Wiseman announces 2ppl cut in milk price
Howard Walsh, Farmers Guardian, 30 April 2012

Embattled Dairy Crest cuts milk price for contracted farmers
Julia Glotz, The Grocer, 26 April 2012

Prices at the Fonterra GlobalDairyTrade auction continue to slide, reaching their lowest point since August 2009.

The GDT-TWI Price Index fell 2.4 per cent relative to the previous auction to an average winning price of US$2,843. The biggest falls were in anhydrous milk fat and milk protein concentrate, of 13.6 per cent and 11.7 per cent respectively. Whole milk powder fell 2.2 per cent and skim milk powder dropped 4.6 per cent.

Bucking the downwards trend cheddar rose 3.1 per cent and lactose was up 3 per cent along with it.

The lag between international trade and domestic retail dairy prices may become a political issue in New Zealand as surveys show consumers believe they are paying too much for dairy relative to other staple goods.

Dairy prices slide 2.4pc in overnight auction
New Zealand Herald, 2 May 2012

Trading Event 67
GlobalDairyTrade, 1 May 2012

Cheaper dairy prices in store as auction falls
Owen Hembry, New Zealand Herald, 3 May 2012

Murray Goulburn (MG) is set to open its third and fourth international offices as part of a strategy to increase their Asian presence.

The Australian co-op will open a Regional Head Office in Singapore to oversee MG's operations in the region. Southeast Asia makes up 15 per cent of world dairy trade and imports are worth AU$6 billion each year.

Managing Director, Gary Helou, says that “The region’s local dairy production will not meet future demand growth and consequently these markets will continue to look to key exporting countries like Australia to meet future dairy food demand".

MG will also be opening a Vietnam office in an effort to boost sales in the local market. Mr Helou says that in Vietnam "Dairy food consumption growth is forecast to be in excess of 10% p.a. and local milk supply will be insufficient to meet this growing demand,” opening up a perfect opportunity for MG.

MG's first and second international offices are in Tokyo and Dubai.

Murray Goulburn increases presence across Asia
Murray Goulburn Media Release, 2 May 2012

MG expands to Singapore, Vietnam
Sarah Scopelianos, The Weekly Times, 2 May 2012

Burra Foods has joined Murray Goulburn and Warrnambool Cheese and Butter by raising their milk price, their third step up for the season.

The Gippsland processor has raised their price of fat to $0.10 per kg and protein to $0.25 per kg.

CEO, Grant Crothers, said that “Despite these difficult market conditions, the strength in our business model allows Burra Foods to achieve our closing price forecast announced at the start of the season and reaffirms our commitment to pay a premium for milk in Gippsland”.

Burra Foods steps up
The Weekly Times, 30 April 2012

Dairy uncertainty remains
Simone Smith, The Weekly Times, 2 May 2012

Canada's aspirations to join the Trans Pacific Partnership talks may fall through due to the supply management of their dairy industry.

Canadian Trade Minister, Ed Fast, has said that "we are prepared to have open and frank discussions about agriculture at the negotiating table" but have also "made some very clear commitments to Canadian farmers, particularly those who are involved in supply managed sectors [which includes dairy]."

Because of the refusal to budge on supply management New Zealand has continued to oppose Canada's entry into the talks. Fast's Kiwi counterpart, Tim Groser, stated that "while we know Canada is a free trading country in almost every respect, it is not in its supply-managed industries the most important of that is dairy products," putting them "in a bit of a bind."

See Dr Hauser's blog for a discussion of Canada's supply management.

Canadian entry to trade partnership talks opposed
Andrea Vance, stuff.co.nz, 4 May 2012

Canada vows not to scrap dairy protection
Radio New Zealand, 7 May 2012

Canada puts its hand up to join TPP
Brian Fallow, New Zealand Herald, 5 May 2012

Milk prices have come crashing down across the globe and this little clip expresses it quite nicely.

US dairy production continues to grow as the USDA figures for March are in.

Cheese production output was 946 million pounds, 3.7 per cent higher than the same time last year and 10.3 per cent above last month.

Butter production also increased to 176 million pounds, 6.4 per cent more than March 2011 and 3.9 per cent higher than February 2012.

Skim milk and nonfat dry milk powder production was up 71.5 per cent and 49.9 per cent respectively, relative to March 2011.

Frozen dairy products bucked the trend as regular ice cream output was down 3.3 per cent and frozen yoghurt production decreased 4 per cent compared to March 2011.

Dairy Products
USDA, 2 May 2012

Fonterra has been recently accused by rival processors of artificially boosting the milk price paid to their farmer shareholders.

Independent Dairy Processors (IDP), made up of Synlait, Open Country Dairy and Miraka, have made a submission to the Dairy Industry Restructuring Amendment Bill claiming Fonterra is setting their farmgate milk price 40 - 50 cents higher than their commodity business can pay. IDP say this is done by subsidising their commodity business thus causing their profits to appear significantly lower than their competitors.

IDF claims that this negatively affects the industry as it reduces the ability of rival processors to compete, along with sending distorting price signals to farmers that cause overproduction of milk and over-valuation of farm land.

Fonterra accused of over-pricing milk
Business Desk, New Zealand Herald, 30 April 2012

Analysis shows Fonterra artificially boosts milk price
voxy.co.nz, 30 April 2012

The future of Australian Dairy Farmers (ADF) continues to be uncertain as Monday's vote on the organisation's proposed restructure failed to produce a clear outcome. Instead another special general meeting will be held on an as yet undecided date.

The restructure is intended to make ADF more financially viable as the organisation is currently running at a loss of $400,000 per annum. It would see a reduction in the number of board members to four farmer members and a fifth independent director.

South Australian Dairyfarmers Association (SADA) and Western Australian Farmers Federation (WAFF) have previously opposed the restructure, although WAFF have recently announced their support. SADA continues to voice concerns that smaller states like South Australia will be inadequately represented

ADF restructure remains in limbo
Alistair Lawson, Stock Journal, 4 May 2012

Australian Dairy Farmers fate undecided
Cassandra Hough, Miranda Saunders & Laura Poole, ABC Rural, 1 May 2012