Dairy Farmers ‘very concerned’ over Ornua PPI review

Farmers are growing increasingly concerned over reports that Ornua is reviewing aspects of the Purchase Price Index (PPI), according to the Irish Farmers’ Association (IFA).

Speaking after a meeting last week of the association’s National Dairy Management Committee, IFA president Tim Cullinan said that he was looking for a “top level meeting” with Ornua to discuss the issue.

“Farmers and the IFA have always valued the transparency the PPI has brought to the dairy market. The same transparency must apply to any proposed change in any aspect of the PPI.

Any review must also be used to show the full benefits Ornua returns to co-ops.

“I think Ornua needs to reflect on the timing of the review when there is such volatility and uncertainty in the market due to Covid-19 and with Brexit looming,” Cullinan argued.

“Farmers need to have full confidence in the PPI and we can’t risk any perception that the goalposts are being moved,” he added.

Assumed processing cost

The issue centres around the ‘assumed processing cost’ of milk – currently fixed at 6.5c/L – that is taken into account when determining the PPI.

It is understood that processors feel the current assumed processing cost does not adequately reflect the costs of processing and the investment in stainless steel in recent years.

An increase in assumed costs would consequently lower subsequent PPI monthly indices, and indicate a lower milk price at farm level.

A rise – and the extent of such a rise if one emerges – is at the centre of talks between board members at present and over the coming months, it is understood.