Milk Price Must Increase for December Supplies
The Ornua PPI for December has climbed to 135.5, an equivalent farm gate price of 41.6cpl (VAT incl). When adjusted to include the Ornua Value Payment, worth €3.72m, the equivalent farm gate price is 45.6cpl.
Due to rising input costs, adverse weather and more restrictive environmental policies, global milk supply from the main exporting countries has been constrained despite a substantial increase in dairy commodity prices.
IFA Dairy Chairman Stephen Arthur said this tightened supply is supporting the sustained rise in milk price we have seen for the past six months.
This week’s New Zealand GDT auctions also reported milk price increases in butter, SMP and Cheddar Cheese.
However, the benefits to farmers of the increase in milk price have been significantly offset by the rise in input costs.
Teagasc estimate that the average cost of production will increase by 13% in 2022, on top of a 9% increase in 2021. Combined, this will lead to a cost increase of circa 23% within two years and is expected to result in a decline in average incomes for dairy farmers this year.
Stephen Arthur said processors must pay a milk price well in excess of 40 cent per litre this month.
“Given the buoyant year processors have had and the rising costs farmers will have to incur this year, every board member has to seriously consider a 13th payment for its suppliers,” he concluded.