‘Unacceptable’: Ornua PPI changes ‘a retrograde step’

Changes to Ornua’s Purchase Price Index (PPI) have been described as a “retrograde step” for the dairy exporter to take, according to the Irish Creamery Milk Suppliers’ Association (ICMSA).

Chairperson of ICMSA’s Dairy Committee, Ger Quain, commented on the exporter’s changes set to be made to the processing cost used to establish the Ornua PPI farmgate price equivalent.

Quain said that the association had argued against the increase and had noted that, given the scale of expansion in this country, efficiencies at processing level must surely have improved.

It is simply unacceptable that adjustments can be made based on data provided by processors without any independent oversight and the ICMSA’s position was made clear at every level and at every stage.

“There should be no changes in the processing cost used in the PPI calculation until a full, independent assessment of processing costs in Ireland is carried out in a clear and transparent way.

“We think it is a retrograde step for Ornua to proceed with such a change until an accurate, up-to-date picture of processing costs in Ireland was established by such an independent review,” Quain concluded.

PPI changes

The ICMSA’s comments come following the approval of changes to the index by the Ornua board on Tuesday, July 14.

The PPI is a measure of Ornua’s market performance on commodity products, it should only include base commodities.

As such, previously included market premium payable by Ornua will be removed and expressed alongside the PPI, the exporter said.

In addition, going forward the annual members’ bonus will be paid monthly and combined with the market premium.

Together, they will be called the ‘Ornua Value Payment’ and reported as part of the monthly PPI communication.

As well as these two changes, Ornua confirmed that the estimated member co-op milk assembly and processing cost, used to convert the PPI (for the Ornua base commodity portfolio of products) to a net cent per litre indicative milk price, will move from 6.5c/L to 7c/L.