Storm brewing in Ornua amid mooted changes to PPI
Proposed changes to the Ornua Purchase Price Index (PPI) look set to become a bone of contention between dairy farmers and processors.
According to Ornua, the PPI is “a monthly indicator of market returns on dairy products purchased by Ornua [typically butter, cheese, whole milk powder and protein products], relative to comparable returns generated in a base year ”.
It is understood that processors feel the current assumed processing cost does not adequately reflect the costs of processing and the investment in stainless steel in recent years.
An increase in assumed costs would consequently lower subsequent PPI monthly indices, and indicate a lower milk price at farm level.
A rise – and the extent of such a rise if one emerges – is at the centre of talks between board members at present and over the coming months.
The most recent PPI was announced last Wednesday, June 4, with an increase revealed for June.
The PPI index for the month is 101.1 – which is up from the 99.8 (converting to 29.4c/L) in the previous month.
A spokesperson for the Irish dairy exporter explained that the increase is due to higher powder returns coupled with stable cheese and butter returns.