Irish Farmers’ Association (IFA) dairy chair Stephen Arthur insists that milk processors must pay a milk price that reflects the PPI and the Ornua value payment.

“When the market dips, processors are always quick to pull the price. Now that the market is buoyant, they must reflect the trade with a meaningful rise in milk price,” said Arthur.

The Ornua purchasing price index (PPI) for September is 121.8, or 36.6c/l inclusive of VAT.

When adjusted to include the Ornua value payment, this equates to 39.86c/l.

In July, 2020 Ornua changed the way in which it reported the PPI.

This revised payment structure has now been in place for over a year.

Compared with July (€3.2m), August (€3.4m) and September (€5.8m) of 2020, the value of the Ornua value payment has tripled for July (€10.05m) and August (€10.11m) and has almost doubled for September (€9.66m) of this year.

The revised PPI, it stated, is a measure of Ornua’s market performance on commodity products. Therefore, it should only include base commodities.

Market premium

Any market premium along with the members’ bonus would be expressed separately as the Ornua value payment.

In addition to these changes, processing costs were revised upwards from 6.5c/l to 7.0c/l.

On the global market, spot commodity prices across Europe have risen in the past week and averaged €4,277 for butter (+0.9%), €2,707 (+1.3%) for SMP and €983 (+1.3%) for whey.

The EU futures market is also rallying for the October 2021 to May 2022 period, with price increases in the past week of €4,431 (+4.3%) for butter, €2,775 (+1.8%) for SMP and €966 (+1.0%) for whey.

Farmers have been asking what the processors are doing with this bonus and why aren’t they paying it back to them, concluded Arthur.