Processors and co-ops have been warned that farmers cannot “afford” further cuts to the milk price.
That is according to farm organisations who today (Thursday, June 8) called on processors and co-ops to restore the milk price paid to farmers to reflect a new “resilience” in milk markets.
Earlier this week the Ornua Purchase Price Index (PPI) decreased again for the month of May as Ornua confirmed an index of 123.6, down from the 126.7 figure announced last month with respect to April.
But farm organisations have called for this trend to be reversed and for the milk price to mirror an improvement in dairy commodity prices.
According to the Irish Creamery Milk Suppliers’ Association (ICMSA) there has been a strong “upswing in spot prices” on milk markets which it believes is significant.
ICMSA’s dairy committee chair, Noel Murphy, believes there is “no reason for any co-op in Ireland to cut the price they pay for milk supplied in May.
“A look at the markets will explain why: Dutch dairy quotes saw whole milk powder (WMP) go above 40cpl for the first time since January – that’s an upswing of almost 4cpl in value over the course of those five weeks in May.
“The industry standard butter/SMP mix is up over 2cpl in that same period. These figures are only a ‘snapshot’ of the market, but the trend is unmistakable and has to be acknowledged by the co-ops holding May milk price for the most important production month of the year.
“The boards must look at the categoric upward swing in markets and then factor in the recent massive cuts to price, reduction in grass and the alarming possibility of having to resort to using winter stores of fodder,” Murphy said.
He described the organisation as “very confident” that the co-ops will hold the price in a way that will “inspire a degree of confidence in the milk suppliers and throughout the wider sector for the remainder of the year”.
Meanwhile Stephen Arthur, dairy chair of the Irish Farmers’ Association (IFA), has stressed that the current price paid to farmers is “not sustainable”.
He said that it is clear to see that “gains” have been made across all commodities and despite the dip in the Global Dairy Trade (GDT) index earlier this week commodity prices for butter and cheese have increased.
“The Ornua PPI for May equates to 36.7cpl excluding the Ornua Value Payment which is estimated to be worth 2.18cpl. Markets are recovering.
“We know that the global market for dairy commodities is challenging but it is recovering. We need all processors to support milk price and deliver for their suppliers in their time of need,” Arthur said.