IFA claims co-ops have failed to pass back the full value of the Ornua PPI to farmers since May

Dairy cows in lush pasture with blue ocean in background
Dairy cows in lush pasture with blue ocean in background
Ciaran Moran

Ciaran Moran

Analysis by the IFA Dairy Committee of co-ops’ milk prices had shown that most had failed to pass back the full value of the Ornua PPI since last May. 

IFA National Dairy Committee Chairman Tom Phelan said that the Committee is seeking a commitment by co-op board members that they will hold the milk price for at least all of the winter months.

In their analysis of milk prices for the main milk purchasing co-ops for May to September, the IFA claims a 350,000l supplier would have been better off by between €414, and €1,957 had he/she been paid the Ornua PPI milk price equivalent for the same period.

“It is clear that co-ops have benefited from major milk volume increases for the August to October period, which they purchased at less than the market was returning to them at the time.  Over the same period, European milk purchasers such as Friesland Campina, Arla, Lactalis and others were actually increasing payouts for farmers,” he added.

“With market signals now a little more challenging, and bearing in mind that volumes will ease seasonally – even if they continue to be up on last year’s – co-ops must now make a clear commitment to farmers that they will hold the milk price at the current level at least for the winter months,” he said.

It comes as Global Dairy Prices dropped for the sixth time in a row at a fortnightly auction early on Wednesday as prices for a key product, whole milk powder, sank to a two-year low.

The GDT Price Index dipped 2pc, with an average selling price of $2,851 a tonne. The index had fallen 0.3pc at the previous sale.

Prices for whole milk powder (WMP), the most heavily traded item, fell 2.9pc to its lowest since August 2016 and are expected to fall further on strong supply from New Zealand, the world’s largest dairy exporter.

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“The expectations of continued milk supply growth from New Zealand will put ongoing pressure on WMP prices,” AgriHQ dairy analyst Amy Castleton said in a research note.

Butter prices also fell 1.7pc, though skim milk powder eked out a 1.2pc gain.

Rural Economist with New Zealand bank ASB said strong New Zealand milk production continues to put a damper on dairy prices.

"Plus there may be more price weakness to come.

"Anecdotally, New Zealand production has gone up another gear over October, the peak month for New Zealand production (October production data will be published mid-November).  If these anecdotes prove correct, then the extra milk will put further downward pressure on dairy prices.

"That said, there is an increasing chance of an el Niño weather pattern this summer and the associated dry could put a halt on production later in the season.  But that’s a story for the summer months.  For now, the momentum is on production’s side and we expect some strong production numbers over the next month or two," he said.

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