We are officially at the halfway point of the year and H1 2023 has brought some relative calm after the countless storms we had to navigate over the last few years. Prices had started to drop at the back end of 2022 and this sharp drop continued well into Q1 2023. The record high milk prices in 2022 had offered a huge incentive to farmers across Europe to produce as much milk as physically possible to reap the financial rewards. The market started to settle a bit in the springtime but the drop in commodity prices also inevitably led to a sharp and sudden drop in milk prices. The high prices of 2022 incentivised high milk production levels but the drop of the milk price then exposed the high input cost every milk producer now had to face with inflation rampant throughout the global economy.
Cheese Prices Stabilizing
Mozzarella is the best indicator on how cheese prices are moving as it’s the only truly global cheese.
Political Unrest in the Netherlands
There have been major farmer protests since summer 2022 after the current Dutch PM Mark Rutte committed to halving overall nitrogen emissions by 2030
Farmers Protests in Ireland
In further protest news closer to home there were demonstrations in June from farmers outside the Kerry Group plant in Charleville about the recent cuts to the milk price.
Farm Labour Shortages
The rising costs of milk production have been further compounded by farm labour shortages and top European dairy producer Arla has warned of further price increases as a result.
Gruyere Cheese Exports Collapse
In another sign of the times we live in it was announced in June that production of the famous Swiss cheese Gruyere will be cut by 10% over the next year.
I hope this information helps.
I’d like to sign off by wishing you all a lovely summer and I’ll be back to share my views on Quarter 4 in good time,
Your Sincerely
Ian Galletly
Managing Director
