The Ornua purchase price index (PPI) for the month of September is 121.8, up from 118.1 in August. By our estimates, this result is the highest index reported by Ornua since early 2014.

The September Ornua result just announced equates to a gross milk price of 41.7c/l. If we then take off the assumed processing cost of 7c/l, it leaves a net milk price of 34.7c/l.

The Ornua value payment then needs to be added on to this to allow us to compare like with like to previous PPI indicators since it was changed in July 2020.

Co-op boards will meet over the coming 10 days to set September milk price

This means another 3.1c/l should be added on top of the 34.7c/l giving an “all in” milk price excluding VAT of 37.8c/l (39.8c/l including VAT). This price can then be compared to farmgate prices.

From the Irish Farmers Journal monthly milk league, the base price for August at the same solids was 33.8c/l excluding VAT.

This means there is now a 4c/l difference between what the processors paid for August and what Ornua says it can get from the market (37.8c/l excluding VAT).

Co-op boards will meet over the coming 10 days to set September milk price.

Payment

IFA dairy chair Stephen Arthur insists that milk processors must pay a milk price that reflects the PPI and the Ornua value payment.

Farmers are asking what are processors doing with this bonus

“Milk processors continue to pay a price which is only reflective of the PPI without the Ornua value payment.

“Farmers are asking what are processors doing with this bonus and why aren’t they paying it back to them. When the market dips, processors are always quick to pull the price. Now that the market is buoyant, they must reflect this with a meaningful rise in milk price,” he said.