Lakeland Dairies’ milk price below the Ornua Purchase Price Index (PPI) is “unjustified”, the chair of the Irish Creamery and Milk Suppliers’ Association’s (ICMSA) Dairy Committee, Noel Murphy has said.
The processor cut its milk price for August supplies by 1.5c/L. This gives a price of 34c/L based on standard constituents of 3.6% butterfat and 3.3% protein.
However, earlier this month Ornua had confirmed that its PPI fell from 121.3 to 119.2 last month, and announced an indicative return of 35.2c/L, VAT inclusive.
Lakeland milk price
Commenting on the decision of Lakeland Dairies to pay 1.2c/L less than the Ornua PPI for August milk, Murphy said that a base price of 34c/L is “unjustified and unacceptable”.
He said it is “impossible to understand” how Ornua is paying 35.2c/L to milk processors and before value added based on current market conditions, while farmers are getting 1.2c/L below this level.
“And bearing in mind when many farmers are producing milk below the cost of production and every cent is absolutely critical in the current climate,” Murphy added.
He raised the question whether processors were taking the “easy option” of cutting the milk price rather than “getting the stronger price from the marketplace that is obviously there, given prices in other EU countries”.
“Irish farmers’ sustainability statistics are amongst the best globally; we operate a grass-based system of production almost unique in the EU; we are fully quality assured and we are getting paid the worst price in the EU.
“There is something seriously wrong with our milk price at present relative to other EU countries, and this Lakeland decision to pay an August milk price below the Ornua PPI is simply unacceptable.”
The ICMSA Dairy Committee chair added that Lakeland’s milk price cut also highlights the “need for co-op boards to ensure that the PPI is the minimum price paid to farmer-suppliers”.
‘Unsustainable’
The ICMSA dairy chair said that while the market has weakened in recent months, input costs at farm level haven’t followed the same trajectory.
He noted that energy costs have “come back” at processor level and that the value-added element is “worth an additional €6.9 million for just the month of August”.
“Paying a milk price 1.2c/L below this level at a time when Irish milk processors are already paying one of the lowest prices in the EU is simply unsustainable,” he said.