Ornua’s Purchase Price Index (PPI) for June should make a “significant jump“, according to the Irish Creamery Milk Suppliers Association (ICMSA).

The notable rise in dairy markets should result in a substantial increase, the Chairperson of the ICMSA’s Dairy Committee, Gerald Quain, said.

All market indicators have moved on strongly – with EU statistics showing that butter prices have increased by 17%, skimmed milk powder (SMP) prices are up by 14%, whole milk powder (WMP) prices rose by nearly 9% and cheddar prices are up by over 7% since late April, he added.

Other lesser market indicators are following these trends or, in many cases, exceeding them. Farmer-suppliers are fully justified in anticipating an increase in the Ornua PPI for June, Quain said.

He highlighted that the “very obvious gap” between the rise recorded in the Ornua PPI and the “significantly higher” increases witnessed in dairy markets is beginning to attract a lot of comments.

Since the start of 2017, the Ornua PPI has only increased by 1.4%; while the ICMSA understands that the markets were uncertain in the early months of the year, that uncertainty was dispelled quite a while ago.

“Very notable, subsequent surges in the markets have not been tracked by the Ornua index. That would need to change and we’ll be expecting to see a serious jump in the index announced for June.

“Ornua was founded, and exists, to market Irish dairy produce; farmer-suppliers expect it to return prices [in line] with the excellence of their farming and their products,” he explained.

Ornua’s PPI for June must start to bear a closer relation to what is clearly a much improved market situation, Quain concluded.

First increase of 2017

Meanwhile, the index rose by 1.8%, to 106.8%, in May; this represented the first increase to Ornua’s PPI in 2017.

Since the beginning of the year the PPI remained relatively static. It began the year at 105.4% in January, before decreasing slightly to 105% in April.

The last time Ornua’s PPI reached the level seen in May was in the latter half of 2014, over two and a half years ago.

In the second half of 2016, the PPI enjoyed a surge; it climbed from a low of 81% in June of last year, right up until the level it reached in January 2017.

Ornua is expected to announce its PPI for the month of June in the coming weeks.