Dairy Council Report March 2021
The Ornua PPI for February is due this week. For January the PPI was 107.3 The Ornua Value Payment was worth €0.9m. Taking account of this, the IFA adjusted PPI amounts to 33.9 c/L, including VAT.
The Farmgate price paid for milk (3.6% fat and 3.3.% protein) listed below ranged from 32 c/L to 35c/L, including bonuses and VAT (at the new rate 5.6%).
|Processor||PROTEIN €/kg||% Protein||c/L protein value||FAT €/kg||% Fat||c/L fat value||‘C’ charge||A+B-C||Bonus||VAT excl.||VAT||VAT incl.|
Spot prices for commodities are positive across each of the market indicators.
|GDT – 16th Feb||€4256 (2%)||€2661 (0.3%)||€3541 (2.4%)|
|EU MMO – 21st Feb||€3580 (2.2%)||€2350 (0.9%)||€3070 (-0.1%)|
3.4/4.2% Milk price Quotation
The IFA Dairy committee has clearly outlined its opposition to the proposed change to base price quotations.
- IFA have not been consulted on this potential change nor have suppliers been adequately informed.
- IFA see no merit in this unnecessary change as it will only cause more confusion amongst suppliers regarding milk price.
- There is potential that any gains in improving milk solids at farm level could be masked and subsequently eroded over time under the new pricing structure. In addition depending on how it is applied, it could reduce any bonus paid which are adjusted for constituents.
- Instead IFA recommend to continue quote milk price at 3.3/3.6 or alternatively to provide greater transparency quote milk price on a per kilo of milk solids basis for fat and protein.
- IFA has written to all milk processors stating its position and has requested that the letter be read out at the next round of board meeting. It appears that the letter was read out at some board meetings but not all.
- It has come to light that in its first month of differential price reporting, Dairygold made a critical error in reporting the milk price at 3.4/4.2% in its supplier statements.
Dairy Beef Scheme
- Application period expected to open at the end of March/beginning of April.
- Current proposals are as follows:
- Proposed €20 per calf weighed
- Maximum payment would be on 20 calves per herd.
- Enough funding for 250k calves, approx. 900k would be eligible
- All breeds of calves currently eligible
- Ambition within the Dept. to build upon these schemes
IFA Dairy Vulnerability Analysis
The IFA Dairy Vulnerability Analysis was published in January. Some key statistics worth nothing:
- Since 2015, over €2.2bn has been invested by dairy farmers and over €1.3bn has been invested by milk processors
- When adjusted for labour, dairy income is marginally below the average industrial wage at €48,049
- The return on assets for Irish farms is below the EU average at 4.4%
- Any reduction in milk price or fertilisation rates has the potential to reduce farm incomes by 10-20%
- The report is available here.