PPI shows ‘market in stronger position than co-ops reporting’

The recent rise in the Ornua Purchase Price Index (PPI) shows that the market is in a stronger position than milk purchasers and co-ops are reporting to dairy farmers, according to the Irish Creamery Milk Suppliers’ Association (ICMSA).

Reacting to the April PPI increasing to 31.6c/L, ICMSA dairy chairman Ger Quain said that the price rise fully vindicated his recent comments on the matter.

Quain noted the speed with which some co-ops and milk purchasers had reduced their price when the index fell last month, and he said that the ICMSA expected to see the same speed applied to a price rise this month.

Markets

Wholesale markets continue to supply positive trends with the GDT auction increasing once again in its first of two auctions in May.

Putting this to context, Mr. Quain pointed out that the GDT has not yet had a negative auction in 2019, with 11 consecutive positive adjustments.

European wholesale markets are also suggesting these positive trends with the current Dutch quotations at 31.7c/L for the butter / skim milk powder (SMP) mix and almost 35c/L for whole milk powder (WMP).

“Milk processors right across the continent are paying a higher price for their farmers’ milk with the three major Irish companies languishing in the ‘relegation zone’ of the LTO European Milk league table.

Questions

“Irish dairy farmers and their representatives are asking why Irish product is not being sold at these prices given that we are told that the return from the market is below the current prices paid to farmers,” he said.

“The obvious reply to that is that in the Ornua PPI we have a basket of Irish goods being sold for 31.6c/L – and this figure is itself in excess of what some processors are paying their member suppliers,” Quain said.

“The ICMSA is clearly saying that April milk prices must – at a minimum – meet the PPI or the co-ops and purchasers will face increasing disillusionment and anger from their farmer-suppliers.”

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