The base milk price has to rise now to reflect market returns, IFA dairy chair Stephen Arthur said following the latest increase in the Ornua PPI and prices at the Global Dairy Trade auction.
The Ornua purchase price index (PPI) lifted again for February, rising to 108.5, equivalent to a 0.4c/l price lift, while prices surged 15% at Tuesday’s Global Dairy Trade (GDT) auction.
Arthur said now is the time to increase milk price.
“Processors need to step up and deliver a higher price. Input costs are soaring and farmers need a rise in price immediately.
“Seasonal bonuses should not distract from the base price. The base price has to rise now to reflect market returns,” he said.
The lift in the PPI was driven by stronger butter and powder returns, which were also seen in the GDT. When adjusted to include the ‘Ornua Value Payment’, the PPI equates to 34.99c/l.
When adjusted for the Ornua Value Payment, and accounting for 7c/l assumed processing costs, the index puts the February equivalent milk price at 30.11c/l excluding VAT (31.8c/l including VAT).
When the estimate of the Ornua Value Payment of 2.77c/l is added on, the final comparable equivalent milk price is 32.9c/l, excluding VAT (34.7c/l including VAT).