How does milk price compare with the Ornua PPI?
It has been outlined that a milk price increase of “at least 1c/L is justified in most cases”, especially for co-ops which have been paying less than the Ornua Purchase Price Index (PPI) equivalent for the last few months.
Speaking ahead of the first co-ops’ announcements of May milk prices, the Irish Farmers’ Association’s (IFA’s) national dairy chairman, Tom Phelan, said: “All indicators we have been monitoring for the last couple of months have returned more than the main Irish co-ops have been paying.
“The May Ornua PPI, which tracks the products and prices traded for the month in question, and is therefore very representative of Irish co-ops’ activity, at 30.45c/L + VAT, is only matched or bettered by the four west Cork co-ops.
“Since April, the gap between co-op payouts and the Ornua index has widened.
“Average EU spot quotes for butter and SMP [skimmed milk powder] on June 5 would have returned a milk price equivalent of 32.02c/L + VAT [33.73c/L including VAT] using the same processing cost.
It is clear that Irish co-ops are being overly cautious, and are denying farmers the real current market returns, making them pay for potential impacts from Brexit which have yet to materialise.
“There is clear scope for co-ops to increase the price they pay to farmers, in most cases by at least 1c/L for May milk.”
Concluding, Phelan said: “I urge co-op board members, when they sit down to decide prices in the next few days, to see to it that this is passed back to their fellow dairy farmers.”