The Irish Farmers’ Association (IFA) has said that seasonal bonuses cannot be used by processors to mask poor base milk prices.
Chair of the IFA Dairy Committee Stephen Arthur was reacting to the confirmation today (Wednesday, March 2) of Ornua’s Purchase Price Index (PPI) for February.
The PPI for February is 152.8, which equates to 45.8c/L including VAT. This is based on Ornua’s product purchase mix and assumed member processing costs of 8.7c/L.
That is an increase of over 5c/L compared to the January PPI figure.
In addition, the Ornua Value Payment payable to members for last month is €470,000, which equated to 2% of gross purchases in the month.
Milk price
IFA dairy chair Stephen Arthur said that when the PPI is adjusted to include the value payment it results in a price of 46.9c/L.
He stated that processors are still not matching the farm gate milk price set by the index which has “accommodated a rise in processing costs”.
“There is a 3-4c/L differential between the PPI and farm gate prices farmers received in January. The differential rises to over 5cpl when the Ornua Value Payment is included,” he said.
“Processors paying seasonal bonuses cannot use these bonuses to mask a poor base price. These are unconditional bonuses paid regardless of market returns to reward farmers for out of season milk.
“The reluctance of milk processors to pay what the market is returning cannot continue. Serious questions need to be asked of board members as to what is happening [regarding] the Ornua Value Payment.
“Over the past 12 months, the European price for butter, skim milk powder and whole milk powder have each increased by over 50%. During the same period, IFA estimate the average Irish farmgate milk price has increased by around 27%,” Arthur added.
“Farmers are asking where this money is going. The lack of accountability has to be answered this month with a base price in excess of 45c/L, no less,” the IFA dairy chair concluded.