The Ornua PPI for February is equivalent to 45.8cpl. When adjusted to include the Ornua Value Payment this equates to 46.9cpl.
Commenting on this latest development, IFA Dairy Chairman Stephen Arthur said even when the PPI has accommodated a rise in processing costs, it’s still returning a farm gate milk price that processors are not matching.
This month’s PPI accommodates a rise in processing costs from 7c to 8.7cpl which reflects the impact of rising natural gas costs.
There is a 3-4cpl differential between the PPI and farm gate prices farmers received in January. The differential rises to over 5cpl when the Ornua Value Payment is included.
“Processors paying seasonal bonuses cannot use these bonuses to mask a poor base price. These are unconditional bonuses paid regardless of market returns to reward farmers for out of season milk,” he said.
The reluctance of milk processors to pay what the market is returning cannot continue. Serious questions need to be asked of board members as to what is happening the Ornua Value Payment. Over the past 12 months, the European price for Butter, Skim Milk Powder and Whole Milk Powder have each increased by over 50%.
“During the same period, IFA estimate the average Irish farmgate milk price has increased by c. 27%. Milk processors are returning a price significantly less than what the market is proven to be delivering. Farmers are asking where this money is going. The lack of accountability has to be answered this month with a base price in excess of 45cpl, no less,” he concluded.