This week’s cut in May milk price will take €1,050 off the May milk cheque for the average farmer milking 100 cows and producing about 5,000l per cow.

Lakeland and Glanbia cut milk price this week by 1.5c/l and 1c/l respectively. Should these cuts in May milk price be replicated for the national milk pool, it will see €15m knocked off the May milk cheques for dairy farmers.

Typically in May, 14% of the annual milk is produced from spring-calving farms, so that means the cut to milk price is on 70,000l for the month.

In May, dairy farmers produced 997m litres nationally. Our survey last week suggested May milk will be back 5m to 10m litres compared to May 2017, dairy farmers could potentially be down over €20m when the price and volume drops are combined.

The significant difference between top and bottom remains, with over 3c/l between the top-paying west Cork co-ops and Glanbia, one of the lowest prices. Last month, Lakeland paid 31.65c/l for April milk, which included a 1.5c/l top-up. For May, the bonus is removed so May milk price will be 30.15c/l ex-VAT.

Meanwhile, Glanbia paid 29.41c/l for April milk, which included a 2c/l top-up.

For May, this has been reduced to a 1c/l top-up so the Glanbia May price will be around 28.41c/l ex-VAT. The difference between Lakeland and Glanbia is over €1,200 on average for the May milk cheque.

Farm organisations have reacted with disappointment to the cuts, with the IFA calling on co-ops that have not yet set a price to maintain base prices and support payments.

PPI increase

Ornua’s purchase price index (PPI) jumped 5% in May after dropping for the previous six months. The PPI, which represents the price of dairy products exported by Ornua, stood at 105.4 last month.

“This is up from 100.4 in April, which reflects stronger returns in the month for butter and powders,” a spokesperson for Ornua said.

This is consistent with recent butter quotes over €6,000/t on European spot markets.

The latest PPI value is equivalent to a milk price of 29.79/l excluding VAT, assuming processing costs of 6.5c/l.