Page 5 - CellCheck Newsletter February #5 2015
P. 5
FEBRUARY EDITION 2015
The rise and fall of dairy prices will contnue to be a feature of the markets we supply. Managing this
aspect of dairy business will be a key challenge for the industry, but there are a number of ways it can
be done.
• We need to keep costs of producton as low as possible, all along the supply chain, in order to
prosper when tmes are good, and to survive when tmes are bad. The work of AHI contributes
signifcantly in this regard, as a healthier, beter bred herd has a signifcant impact on farm and
industry efciency.
• Customers want to limit the ups and downs of prices as much as suppliers do. Working together,
suppliers and customers can develop strategies to help each other deal with volatlity (i.e.
through long term supply agreements).
• Developing strong brands, such as Kerrygold, can reduce volatlity, as people are more willing
to pay for a product that they know and trust than for one that they don’t.
• The US has a had a positve experience of using fnancial tools to help manage the risks of
volatlity, by using commodity markets such as the Chicago Mercantle Exchange (CME) to
‘hedge’ their income. While such tools are in their infancy in Europe, they are growing (i.e. via
the Eurex exchange)
• Government and EU-backed programmes, such as interventon buying and single farm
payments, can help provide a safety-net to the most extreme risks arising from dairy market
volatlity.
Market volatlity, like the weather, is something we will always have to deal with as part of a normal,
healthy dairy market. Managing volatlity, and minimising its negatve efects, is a key priority for the
industry in Ireland, and one which will require actve input from all stakeholders
PAGE 5
The rise and fall of dairy prices will contnue to be a feature of the markets we supply. Managing this
aspect of dairy business will be a key challenge for the industry, but there are a number of ways it can
be done.
• We need to keep costs of producton as low as possible, all along the supply chain, in order to
prosper when tmes are good, and to survive when tmes are bad. The work of AHI contributes
signifcantly in this regard, as a healthier, beter bred herd has a signifcant impact on farm and
industry efciency.
• Customers want to limit the ups and downs of prices as much as suppliers do. Working together,
suppliers and customers can develop strategies to help each other deal with volatlity (i.e.
through long term supply agreements).
• Developing strong brands, such as Kerrygold, can reduce volatlity, as people are more willing
to pay for a product that they know and trust than for one that they don’t.
• The US has a had a positve experience of using fnancial tools to help manage the risks of
volatlity, by using commodity markets such as the Chicago Mercantle Exchange (CME) to
‘hedge’ their income. While such tools are in their infancy in Europe, they are growing (i.e. via
the Eurex exchange)
• Government and EU-backed programmes, such as interventon buying and single farm
payments, can help provide a safety-net to the most extreme risks arising from dairy market
volatlity.
Market volatlity, like the weather, is something we will always have to deal with as part of a normal,
healthy dairy market. Managing volatlity, and minimising its negatve efects, is a key priority for the
industry in Ireland, and one which will require actve input from all stakeholders
PAGE 5
