Co-ops Have to Reflect the Generally Positive Dairy Market Situation

IFA Dairy Committee Chairman Tom Phelan welcomed last month’s price increase from some co-ops, but said that farmers in other co-ops were left behind.

Today’s Ornua PPI is up to 101.8, which confirms the continued upward movement in market sentiment.

The Ornua PPI also discloses the Ornua Value Payment, which includes the value from premium, non-commodity products and the monthly trading bonus.  This payment is now being made monthly on a pro-rata basis to all member co-ops and is available to them when determining their farmer milk price,

When the adjusted IFA PPI is applied, the Ornua value payment is equivalent to 1c/l. This brings the total payout to 30.4c/l incl VAT, up from 30.29c/l incl VAT.

“Those processors which failed to increase their price last month last month have to step up this time. Markets have remained much steadier than some of the predictions we heard at the onset of COVID-19,” he said.

“The price cuts in April and May came too soon and were too severe.  As the markets didn’t suffer as much as expected, co-ops should have reserves to increase the prices paid out to farmers,” he said.

Tom Phelan said that because of recent weather conditions, production costs on dairy farms have increased and farmers need the maximum returns.

According to the Focus on Agri-food & Beverages report for August 2020, the Dept of Business, Enterprise and Innovation predict the total income reduction across the primary agricultural sector in Ireland in 2020 will range from €0.7 billion to €1.6bn, with the reduction in average farm incomes projected to be greatest on dairy farms, in absolute terms.

“Some co-ops have the capacity to improve returns and lift themselves off the bottom of the price table.  Suppliers expect the August price to reflect this,” he said.

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