12 October 2017

‘PPI Jump Merits Milk Price Boost’

News

Dairy farm organisations are pushing for a boost in September’s milk price, highlighting the strong international markets and the rise in Ornua’s PPI (Purchase Price Index) as supporting factors.

The three-point jump announced this week in the Ornua PPI to 114.3 points – which is the equivalent to 34.7c/L including VAT – shows that Irish trading contracts are catching up with the stronger September butterfat and cheese in EU MMO (Milk Market Observatory) and spot price reports, meriting a stronger September milk price according to the Irish Farmers’ Association (IFA).

Speaking on the matter, IFA national dairy committee chairman Sean O’Leary said that the latest EU average returns remained strong to end September at around 41c/L.

After a 5c/L processing cost is deducted, this would suggest a price equivalent of 36c/L including VAT, and as other European dairy farmers were continuing to receive increasing milk prices into October, it is well justified for Irish producers to expect an increase of at least 1c/L on September milk.

“Friesland Campina will pay suppliers an extra 1.25c/kg for October, or a milk price equivalent to 37.65c/L at the Irish 3.3% protein and 3.6% butterfat standard.

“Arla too has increased its October milk price by 1c/kg, which for its UK producers will translate into a 1.5p/L increase to 32.3p/L. Also in the UK, First Milk has also flagged an October milk price increase of 1p to 1.1p/L,” O’Leary noted.

“Irish co-ops will be meeting from this week to decide on their September milk prices, and I believe board members must ensure that suppliers get at least 1c/L more for their September milk.

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