Following the publication of Ornua’s Purchase Price Index (PPI) for November, indicating strong gains in milk price, the Irish Farmers’ Association (IFA) is calling for milk processors to break through the 40c/L price barrier for November.
The IFA said that this morning’s Ornua PPI comes on the back of “continued strong performance” in the international dairy market. This is also reflected in the Global Dairy Trade (GDT) price index, which has seen a solid run of results in recent months.
Ornua’s PPI for last month is 131.9, which converts to 40.3c/L inclusive of VAT (this is based on Ornua’s product purchase mix and assumed member processing costs of 7c/L, and excluding member margin).
According to the IFA, this rises to 44.31cpl when adjusted to include the Ornua value payment.
Commenting on this gain, IFA dairy chairman, Stephen Arthur, said that milk processors must pay a milk price in excess of 40cpl for November milk.
“The global market is very positive at the moment and our industry is very well positioned to take advantage of this,” he said.
International dairy markets continue to perform strongly with the New Zealand GDT index up 14% in the past three months, he pointed out.
Despite rises in global commodity prices, global supply remains sluggish.
Last month, the Irish Creamery Milk Suppliers’ Association predicted an October price per litre in excess of 40c/L. None of the processors delivered on this.
US milk production has slipped back 0.5% in October due to a reduction in cow numbers; New Zealand milk production is back 3.3% and European supplies remain steady, according to the IFA.
“Typically, as milk price rises, global supply increases, but this year we are seeing supply remain steady. This has translated into really strong prospects for milk price for 2022,” he said.
“Our milk processors must command strong product prices in this buoyant global market and deliver a milk price above 40c/L for the rest of the year,” he said.