Ornua PPI rises for month of July…under new format

The Ornua Purchase Price Index (PPI) has risen slightly for the month of July, according to the Irish dairy exporter.

However, this is based on the new format, which takes into account an increase in assumed processing costs, from 6.5c/L up to 7c/L, following the Ornua board’s approval of changes to the index last month.

In a short statement to AgriLand this morning, Friday, August 7, a spokesperson for Ornua said:

“The Ornua PPI [rebased] for the month of July is 101.7.”

This July index converts to 29.3c/L, including VAT, based on Ornua’s product purchase mix and assumed member processing costs of 7c/L, according to the co-op.

The index “is up from 101.3 [rebased] in the previous month”, the spokesperson said, adding:

“The increase is due to higher powder returns coupled with stable butter and lower cheese returns.

“In addition, the Ornua Value Payment payable to members in the month is €3.2 million, which equated to 2.7% of gross purchases in the month [year to date 4.1%].”

To put the rebased July index into context, the PPI index for June was 101.7 under the old format, which converted to a June price of 30.1c/L including VAT, based on Ornua’s product purchase mix and assumed costs of 6.5c/L.

PPI changes

Under the changes to the PPI index announced last month, it was highlighted that, as the PPI is a measure of Ornua’s market performance on commodity products, it should only include base commodities.

As such, previously included market premium payable by Ornua will be removed and expressed alongside the PPI.

In addition, going forward the annual members’ bonus will be paid monthly and combined with the market premium.

Together, they will be called the ‘Ornua Value Payment’ and reported as part of the monthly PPI communication.