‘€12,000 difference in price paid by top and bottom co-ops’

The divergence in milk price across the range of co-ops and processors has now reached “unsustainable proportions” – stretching to a yearly price gap of €12,000 – according to the Irish Creamery Milk Suppliers’ Association (ICMSA).

Commenting on the issue, ICMSA dairy chairman Gerald Quain said that all co-ops should be basing their milk price on paying at a minimum the Ornua PPI.

However, some co-ops have “continuously lagged the index by up to 1.5c/L, while others can be 2c/L above the recently-announced 32.2c/L PPI level.

The market for dairy products is solid as confirmed by all the major indicators at present and he maintained that there was no reason for any co-op to be paying below the Ornua PPI.

In 2018, ICMSA estimates that there was a difference of €12,000 in the milk price that a 350,000L supplier to the top-paying co-op received from his or her co-op over a 350,000L supplier to one of the co-ops near the bottom.

“This is quite clearly a huge gap and, to be fair to milk suppliers, they should at least be getting – at a minimum – the Ornua PPI equivalent price,” the chairman said.

Citing last week’s GDT rising for the seventh consecutive time, Quain added that Dutch spot prices continue their strong start to the year with whole milk powder reaching 34.5c/L for the first time in almost two years.

“With global milk supply weak or flat, indications are that dairy prices will not come under any downward pressure in the near future unless the current talks break down and a no deal is the ultimate outcome of Brexit,” Quain said.

However, markets are pricing some of that uncertainty into their prices at present. Despite this, the outlook is positive, markets have performed well since the start of the year and we want to see co-ops returning at least the PPI price for February milk – that is at least 32.3c/L.

“There is no doubt that price can be exceeded by some co-ops, given their product mix,” Quain concluded.