The Irish Farmers’ Association (IFA) Dairy Committee chair Stephen Arthur has said that processors must increase their milk prices this month to reflect the “rapid rise” in the Ornua Purchase Price Index (PPI).
It was confirmed this week that the Ornua PPI increased to 125.8 in November 2023.
The increase follows a previous rise to 122.3 in October, which was the first rise after nine consecutive months of decreases in the PPI.
With estimated member co-op processing costs of 7.6c/L (excluding any allowance for processor margin) for the Ornua product portfolio, the indicative price return for November is 37.2c/L, including VAT.
There was an additional 2.9c/L equivalent derived from the Ornua value payment.
Ornua said that the latest PPI figure “reflects stronger market returns through the month of November 2023”.
Stephen Arthur said that dairy processors must now raise milk prices for November supplies to reflect the full value of the Ornua PPI.
He noted that the October milk price ranged between 33c/L and 35.5c/L.
“There is a significant gap between what Ornua is delivering in terms of milk price, and what milk processors are paying out,” he said.
Milk price
Arthur said that the cost of production for Irish dairy farmers remains “stubbornly high”.
“Twinned with difficult weather conditions and reduced milk supply, farmers remain under significant financial pressure,” he said.
Arthur said that global dairy markets have rebounded significantly since September, with Global Dairy Trade (GDT) auctions reporting “mainly positive results”.
He also said that the futures markets are signalling strong prices into 2024.
The IFA Dairy chair also warned that the seasonality bonuses commencing in November do not constitute a rise in base price.
“Seasonality bonuses were introduced to encourage out of season milk supply. They are not a prop for base price,” he said.