Cooperatives are being urged to “engage with reality” regarding the setting of a milk price for September.
The Irish Creamery Milk Suppliers’ Association (ICMSA) is making the call following the announcement of the latest PPI (Purchasing Price Index) from Ornua, which it says shows an almost 1.3c/L increase in the index price excluding added value.
The Ornua PPI for September is 121.8, or 36.6c/L inclusive of VAT. This is based on Ornua’s product purchase mix and assumed member processing costs of 7c/L and excluding member margin
Chairperson of the ICMSA Dairy Committee, Ger Quain, said that ICMSA has been consistently tracking co-op prices through the year to date, and the figures revealed what he called “systematic and significant lagging” by some processors.
Quain stated: “These co-ops know who they are, and they need to up their game in terms of September price and through the remaining remaining months of 2021.
“The base PPI has increased by over 16% from January through to September, while the equivalent weighted average for co-op base price has only increased 12% from January to August.
“We believe that a 38c/L base price has to be the starting point for all co-ops both in terms of this month and for the remainder of the year.”
Increasing the base milk price
The farm organisation admitted that achieving an increase in base price is going to be easier for those co-ops who paid higher prices through peak and into autumn.
However Quain added: “That just highlights the lag that some co-ops have allowed develop and now need to make up.
“Milk markets are strong with indicators showing positive movement for the last couple of months, and no prospect whatsoever of any reverse, such as a demand shock.
“Our milk prices need to reflect the ‘here and now’ because our input prices are reflecting the ‘here and now’ and we need market reflecting milk revenue to pay those vastly increased bills,” he concluded.