Co-ops should pay suppliers ‘at least PPI’ price – ICMSA

Milk processors and co-operatives should be paying suppliers a price “at least equal to Ornua’s Purchase Price Index (PPI) levels”, according to the Irish Creamery Milk Suppliers’ Association (ICMSA).

Commenting on current dairy markets, ICMSA Dairy Committee chairman Ger Quain said that, based on all the data and the “rapidly-strengthening dairy markets”, he expected all processors to be paying suppliers a price “at least equal to the PPI’s of 32c/L”.

Quain said that all co-op boards could already send an early and positive signal to their suppliers that 2019 will be a stronger year in terms of milk price.

The Ornua PPI increased for December to over 32c/L and January wholesale markets have increased further; the latest Global Dairy Trade (GDT) auction is up 6.7% with all major products showing big gains.

Quain added: “The trend is interesting and this is the fifth consecutive gain after a somewhat sluggish second half of 2018.

“The prices on spot milk markets have improved with the Dutch Dairy quotes running over 5% higher for butter than this time last month, whole milk powder (WMP) increasing by 6% and skimmed milk powder (SMP) increasing by almost 8% – overall Dutch spots stand at 34c/L.”

The chairman added that spot milk price increased in Italy by 7.5% over the past month to 43c/L, also noting that EU average prices for most dairy commodities have been positive in the same time-frame.

“The co-ops are well aware of the higher input trading bills being carried forward, so they know the level of pressure.

The farmer suppliers need a clear signal from co-ops on milk price and the data clearly indicates that such a signal can confidently be sent through an immediate increase in milk price that reflects where market returns are.

“We’re always cautious about looking too far forward, but we are quietly optimistic about the prospects for milk price in the coming months,” he said.