The Ornua Purchase Price Index (PPI) for the month of April, and the indicative price return, have both increased slightly on the March figure.

The PPI for last month is 132.6, compared to 132.3 for March. This implies an indicative return for April of 38.5c/L (including VAT), an increase of 0.9c/L on the previous month’s figure of 37.6c/L, for milk at 3.6% fat and 3.3% protein.

Ornua said this return – which is net of Ornua’s costs to market – reflects “consistent market returns through the month of April”.

This indicative return was arrived at after deducting co-op processing costs, which, under Ornua’s new system for determining processor costs, has been adjusted for the new quarter of the year.

For March and February (when this new methodology was first used) the processing cost was 9.4c/L. For April, it has been adjusted down to 8.6c/L.

The estimated processing cost is based on Ornua’s estimates of the average cost of processing the Ornua “basket of products”, which is not representative of any particular member co-op. The figure also excludes any allowance for processor margins.

The processing cost is calculated using the methodology announced earlier this year, which uses 2020 estimated co-op processing costs as a base, and indexes the “variable element” to external indices which will be updated quarterly in arrears.

The processing cost will rise or fall quarterly in line with the movements in the variable costs (most notably energy), as per the external indices.

While the latest processor cost is a decrease on the previous two months, it is still ahead of the last processing cost figure used before the new methodology was introduced, which was 7.5c/L for the January PPI.

In addition to all this, the Ornua Value Payment payable to member co-ops in the month of April is €7.2 million, which equated to 5.1% of gross purchases in the month.

Ornua said that the PPI relates to product settlements/payments for the month, and for reasons of seasonality, is “not directly aligned with milk production and payment”.