Market returns on Irish dairy products means there is scope for a meaningful increase in the price paid for July milk, according to the Irish Farmers’ Association (IFA).
IFA Dairy Committee chairman Stephen Arthur said: “The Ornua PPI [Purchase Price Index] showed further increases in July which points to a continued demand for Irish dairy produce.
“Processors in Denmark and the Netherlands, among others, have already increased their August milk price; Irish processors have to follow suit.”
The IFA has said that milk supply worldwide is lagging behind 2021 adding that with the elevated costs of agricultural inputs showing no sign of abating, global milk supply is likely to remain constrained for the remainder of this year.
“In many parts of the country, grass growth is depressed and the cost of production continues to rise,” Arthur continued.
“If processors want to have adequate supplies of milk into the autumn, then they need to step forward now with a price increase to give farmers confidence that they can make a reasonable return over the next few months.”
Ornua PPI and milk price
Meanwhile, last week (August 3), Ornua confirmed that its Purchase Price Index (PPI) had increased by five points for the month of July.
The PPI for last month is 184.4, which is up from the June index value of 179.4.
This most recent PPI figure reflects a price of 57c/L, inclusive of VAT, based on Ornua’s product purchase mix and assumed member processor costs of 9.1c/L, though excluding member margins.
The increase is a result of continued stronger returns across the product range, the dairy business said.
The Ornua Value Payment payable to members in the month is €7.45 million, which equated to 3.2% of gross purchases in the month (3.6% year to date).