Another major processor cuts February milk price

A second major milk processor, Kerry Group, has followed Glanbia’s lead and introduced a price cut of 2c/L for February supplies, paying farmers a total of 34c/L – VAT inclusive.

This brings to an end five months of holding the previous milk price of 36c/L – VAT inclusive.

Last month’s price was not supported by actual demand in the marketplace, according to Kerry Group chief executive Edmond Scanlon.

Scanlon made the comments when presenting the group’s preliminary financial results last month in Dublin.

This follows on from the news yesterday that Glanbia Ireland has cut its milk price for February supplies and will pay its milk suppliers 32c/L, including VAT, for February manufacturing milk supplies at 3.6% butterfat and 3.3% protein.

This is a reduction of 3c/L from the January price.

The Glanbia February milk payment will also include a payment of 1c/L to reflect the “particularly challenging weather conditions experienced on Glanbia farms”.

Glanbia Ireland chairman Henry Corbally said: “Current market returns are significantly below our farm gate milk price.

“The board has this month reduced our base manufacturing milk price by 3c/L to 32c/L to reflect that reality.”

Ornua PPI

Meanwhile, it emerged last week that the Ornua Purchase Price Index (PPI) for February took a sharp fall from the previous month, dropping down to 105.0; this was adjusted from 111.3 in January.

This equates to 31.3c/L including VAT, based on Ornua’s product purchase mix and assumed costs of 6.5c/L.

The February index reflects lower returns for butter, skimmed milk powder (SMP) and spot product, according to Ornua.

This is the lowest the PPI has fallen to in almost a year, having previously recorded an index of 105.0 in April 2017.