IFA: Stable Ornua PPI a Sign that Co-op's Dairy Returns Bottom Out

Fri, 11 May 2018

IRELAND - IFA National Dairy Chairman Tom Phelan has said the Ornua PPI stabilising for the first time since last October is a clear indication that Irish co-ops have seen the worst of dairy returns and are now able to benefit from the firmer dairy prices being reported by the EU Milk Market Observatory.

He said this should help co-ops to continue to support milk prices for April supplies, in recognition of the horrendously difficult late spring dairy farmers have endured.

"At 100.4 points, the Ornua PPI is unchanged at a milk price equivalent of around 30c/l including VAT, when it was expected to be down 1 or 2 cents on this. EU returns for butter, SMP, WMP and Cheddar cheese have been continuously rising for the last number of weeks and, based on late April prices, would justify a milk price of around 2 c/l more," Mr Phelan said.

"Co-op boards will be meeting in coming days to decide on the April milk price, with some of the largest milk purchasers making the earliest, most influential decisions. They must not lose sight of the fact that it is only this month that farmers have started to see improved grass growth, while many could not keep cows outside day and night until a couple of weeks ago.

"Milk cheques have suffered not only from milk price cuts, but also from lower volumes and poorer constituents, while margins have been eaten into by higher feeding costs. Farmers will be legitimately expecting their co-ops to recognise those facts, and to sustain them and their milk supplies, that they will continue to support milk prices," Mr Phelan concluded.