The milk price paid by dairy processors to farmers this month (for supplies in the month of December) “must be well in excess of” 40c/L, the Irish Farmers’ Association (IFA) has argued.

The association said this morning (Friday, January 7) that global milk supply is remaining tight, while input costs for farmers are continuing to increase.

These two factors justify the increase in price, the IFA argues.

The organisation also highlighted that the Ornua PPI for December has climbed to 135.5, equivalent to a farmgate price of 41.6cpl and, when adjusted to include the Ornua Value Payment, worth €3.72 million, the equivalent farmgate price is 45.6c/L.

IFA dairy chairperson Stephen Arthur noted that, due to rising input costs, adverse weather and “more restrictive environmental policies”, global milk supply from the main exporting countries has been constrained, despite a “substantial increase in dairy commodity prices”.

“This tightened supply is supporting the sustained rise in milk price we have seen for the past six months,” Arthur said.

He also pointed out that this week’s Global Dairy Trade (GDT) reported milk price increases for butter, skim milk powder and cheddar.

“However, the benefits to farmers of the increase in milk price have been significantly offset by the rise in input costs.

“Teagasc estimates that the average cost of production will increase by 13% in 2022, on top of a 9% increase in 2021. Combined, this will lead to a cost increase of around 23% within two years and is expected to result in a decline in average incomes for dairy farmers this year,” the IFA dairy chair warned.

“Processors must pay a milk price well in excess of 40c/L this month,” he argued.

Arthur also called for an additional payment to be made, saying: “Given the buoyant year processors have had and the rising costs farmers will have to incur this year, every board member has to seriously consider a 13th payment for its suppliers.”