The Ornua Purchase Price Index (PPI) is continuing to show high market returns for Irish dairy products, despite a decrease in the index for last month.
That’s according to Stephen Arthur, the Dairy Committee chairperson of the Irish Farmers’ Association (IFA).
The latest Ornua PPI, which was announced on Wednesday (October 5) shows that the September index stands at 184.5, which is down marginally from the 184.6 figure for August.
The September figure reflects a milk price of 56c/L, inclusive of VAT, based on Ornua’s product purchase mix and assumed member processing costs of 10.1c/L, excluding member processor margins.
The equivalent milk price is back on the August price of 56.9c/L, while the processing costs outlined by Ornua have increased by almost 1c/L in a month.
Despite this, Arthur said: “The PPI shows that consumers are willing to pay for quality Irish dairy products. This is very good to see as these returns are required to cover the large cost increases that farmers and processors face.”
He added: “On-farm costs are up over 50% since January 2021 and this figure will continue to rise due to spiraling energy and fertiliser prices.
“It’s important for processors to pay the maximum price possible for milk this month.
The IFA dairy chair said that farmers are now facing into the high-cost part of the year, and that there is “real uncertainty at farm level whether it will make financial sense to continue milking cows with the large costs involved”.
“If processors want to ensure a supply of milk, now is the time to give some confidence to suppliers through the milk price,” he added.
Announcing the PPI this week, Ornua said: “The energy cost element of the processing cost is variable and changes each month depending on energy costs”.
Meanwhile, the Global Dairy Trade (GDT) price index has recorded a decrease of 3.5% following its latest auction which took place on Tuesday.
This follows two successive gains for the dairy commodity tracker in the last two trading events.