The recent Purchase Price Index (PPI) information from Ornua, confirming a 0.4% drop during May, means that Irish dairy producer prices should be kept untouched, according to ICMSA Deputy President Pat McCormack.
He described the fall in the Ornua PPI as marginal and insignificant and said the Index demonstrated that milk prices “can and should be” held in full for May.
“If processors and co-ops decide to cut milk price for May then they’ll be disregarding the prices achieved by products traded in the last month.
“That’s why the decision of Lakeland to cut the producer price by 1.5 c/L to 28.75 c/L for May is so disappointing and inexplicable. It’s a serious blow to their suppliers. If an equivalent cut were to be implemented across all May milk supplies by the other co-ops and processors then we would be looking at a €13m reduction in milk cheques to farmers.”
Mr McCormack, who also chairs the ICMSA dairy committee, noted that Southern Hemisphere spot prices have shown a significant softening in the last number of months with reductions of a much smaller magnitude impacting in the northern hemisphere. He also pointed out that the estimated EU average milk price stands at €31.03 per 100 kg for May, down from €31.30 for April.
“This strengthens the argument that milk products that were traded in Europe in the last month returned prices equivalent to those achieved in the first four months of 2015,” he said.
“PPI history shows that the current level of 98.5 resulted in a milk of 30 c/L, as returned in August 2012. This idea of cutting milk price must be studied rationally. But based on the record of the PPI, and prices paid to farmers at various points on that Index, then current milk returns are at a fair and easily justified level.”