Processors urged to ‘reflect Ornua returns’ in milk price

Processors have been called on to increase the milk price returned to suppliers, and “at the very least reflect Ornua returns” by the Irish Farmers’ Association (IFA).

Commenting on the matter, IFA National Dairy Committee chairman Tom Phelan said: “Our analysis shows a very stable European market with positive indications on the global front for increases in commodity prices, as farmers face into months when cash-flow is extremely tight.”

The farm organisation noted that the first Global Dairy Trade (GDT) auction of the new year yielded “significant gains in commodity prices”, surpassing European quotations for butter, cheddar and skim milk powder (SMP) by between €200 and €400.

On this point, Phelan explained: “Though no Irish dairy produce is traded through this auction, it does indicate to us the performance of dairy produced in the southern hemisphere.

Given that milk production in New Zealand contracted in November and that Fonterra has forward sold a significant proportion of its produce, this could be an early sign of tightening supplies.

“This could in turn improve market prices,” he said.

The Ornua Purchase Price Index (PPI) for December “remained stable” according to the IFA, reducing marginally from 104.3 to 104.2.

“When adjusted to include the Ornua Value Payment, we estimate that this gives a milk price of 32.86c/L,” the chairman added.

“Almost all the major milk processors fell short of offering a milk price reflective of the PPI last month,” Phelan concluded.