The perception among dairy processors towards the Ornua Purchase Price Index (PPI) has changed, according to the Irish Creamery Milk Suppliers Association (ICMSA).
Ger Quain, the association’s dairy chairperson, argued that the index was originally presented to farmers as an accurate guide to what price “farmers should be receiving”.
Quain claims that processors now view the PPI as a price “to be aspired to” if the market allows such a price to be paid.
We’re satisfied that the co-ops have now accepted that it is no longer feasible to deny the market reality that is evident to all. The problem is – and will be – their tendency to feed market price rises back to their farmer-suppliers on their traditional ‘low and slow’ basis.
“That’s the reason why even after this month’s round of price rises – that we would argue could have been begun last November – we’re still short of the price per litre that the Ornua index is giving,” Quain claimed.
He said it was “worth noting” how the perception of the index has changed “as communicated by co-ops”.
“It was presented to farmers originally as the price that the co-ops had already received, and therefore the most accurate guide to what farmers should be receiving.
It’s interesting – and very irritating – for farmers to see how that concept has now been changed to one where the price per litre given by the Ornua index is to be interpreted as an aspiration – something that co-ops should aim for ‘if God is good’.
“In terms of the key determinants, the supply-demand dynamic and current weather patterns, the outlook for milk price is positive,” Quain stressed.
He also pointed to the fact that the three main Irish processors occupy the lower positions of the milk price league of EU processors, which he said was not a “sustainable position, and needs to change”.