Dairy Processors Have to Reflect Ornua Returns

IFA Dairy Chairman Tom Phelan said it’s important that processors increase the milk price returned to suppliers, and at the very least reflect Ornua returns.

“Our analysis shows a very stable European market with positive indications on the global front for increases in commodity prices, as farmers face into months when cash flow is extremely tight,” he said.

The first GDT of the new year has yielded significant gains in commodity prices, surpassing European quotations for butter, cheddar and SMP by €200-€400.

“Though no Irish dairy produce is traded through this auction, it does indicate to us the performance of dairy produced in the Southern Hemisphere. Given that milk production in New Zealand contracted in November and that Fonterra has forward sold a significant proportion of their produce, this could be an early sign of tightening supplies. This could in turn improve market prices,” he said.

The PPI for December remained stable, moving from 104.3 to 104.2.    When adjusted to include the Ornua Value Payment, we estimate that this gives a milk price of 32.86c/l.

“Almost all the major milk processors fell short of offering a milk price reflective of the PPI last month,” said.