The Irish Creamery and Milk Suppliers Association (ICMSA) has said that Irish co-ops are “dragging their heels" on milk price as Fonterra Co-op in New Zealand raises its price range again.

The announcement by Fonterra Co-op that its forecast milk price for 2022 will further increase is a clear indication of the direction of milk price, ICMSA dairy chair Noel Murphy has said.

While the ICMSA expects price per litre to reach 43c by this year’s peak, any gains are being ‘eaten through’ by unprecedented input levels. Murphy said that the onus was now squarely on co-op boards to ensure that milk price going forward is “at a minimum” in excess of the monthly Ornua purchase price index (PPI).

Lagging

He said that while farmer milk price did move forward for December milk, it still demonstrably lagged behind the Ornua PPI and he pointed out that this was the case without even including the value added component.

“The cost of fertiliser, in particular, is a huge burden on all farmers this spring and the cost of inputs in general in 2022 will be a massive challenge and drain on farm income.

"The only answer is for milk processors to ensure that the milk price paid to farmer-suppliers is maximised," Murphy added.

As far as the ICMSA is concerned that’s going to mean that the baseline must be the Ornua PPI, which currently is equivalent to 41.5c/l excluding the value added component.

Irish co-ops are dragging their heels on price while inputs surge ahead

Murphy argued that no milk processor achieved this price and as co-ops prepare to set milk price for January, their boards will have to insist that the Ornua PPI on that date is the minimum milk price paid to farmers.

"The reality is that Irish co-ops are dragging their heels on price while inputs surge ahead," added Murphy.

The ICMSA chair said that the parameters of the issue were now clear and it was up to every board of every co-op to step up and set a price that used the Ornua PPI as the baseline.