When setting April milk price, most of the elected board members held the line steady rather than continue the upward curve in milk prices that started in February and March.
The Ornua PPI and other global indicators continued the upward trend, putting daylight between the Ornua PPI equivalent price and what dairy farmers are getting paid.
For April there is now a 2c/l gap between what Ornua is getting from the market for a basket of goods and what the processors are paying farmers (see Figure 1). For January, February and March there was a 1c/l difference, but that has doubled as April milk cheques have landed into farmers accounts. In April alone, a 2c/l difference is worth €1,200 to the average dairy farmer.
So what’s happening? Either the co-ops are playing the long game and retaining cash or they envisage a downturn on the horizon. A downturn looks unlikely. Balance sheets will improve. Now is peak milk supply. This time of the year decides annual farmer income. The other aspect is that not all the co-op product goes through Ornua so maybe they can’t fully reflect what Ornua is getting in the market every month of the year.
Lakeland Dairies tops the April league, paying a solid price and an unconditional 1 c/l bonus to all suppliers.
Three processors – Aurivo, Dairygold and Tipperary Co-op – lifted milk price. Dairygold has a bonus structure for the low-volume months from January to March, Aurivo in February and March.
The downside of paying a higher price when volumes are low is that it must come back down to base at some stage.
The bonuses dropped out for Dairygold and Aurivo for April so both boards gave their price a boost and keep the milk price ahead of the chasing pack that contains the west Cork co-ops and Glanbia.
Tipp Co-op needed a boost as it had been bottom for a long time. Kerry is almost at the bottom of the table, though small north Cork co-op Boherbue retains that honour.