“May is the peak month for milk production and the markets are very strong at the moment. Our analysis of international dairy markets confirms that Irish farmgate milk prices do not reflect the buoyancy in dairy markets,” he said.
“Co-ops have a duty to their farmer suppliers. Any attempt to hoard market returns to shore up their balance sheets will be strongly opposed,” he said.
“Irish dairy processors are not returning the milk price in the marketplace. There’s an unacceptable gap between the market and what farmers are being paid,” he said.
Commodity market returns have yielded consistently high prices for the past three months, yet the farm gate price has not kept pace.
For April, there was a 2 cent/litre differential between the Ornua PPI and the average farm gate price.
IFA analysis (see attachment) comparing April 2020 with April 2021 clearly demonstrated price gains across our three main market indicators. The New Zealand Global Dairy Trade (GDT) index is up 41%; the EU Milk Market Observatory (MMO) mix of butter and skim milk powder is up 30%; and the Ornua Purchasing Price Index (PPI) (including the Ornua Value Payment) is up 25%.
In the same period, the farmgate milk price has only risen by 10%.
The latest Ornua PPI for May has returned a milk price of 37c/L (including the Ornua Value Payment). “Processors need to step up to the mark and pay a fair milk price to their farmers. When the markets are strong, we want the full return. Our input costs have soared and we have to make a return on our investments like any other business”.
Prices for fertiliser have jumped 30% in the past year. Feed prices have risen 12% and green diesel by 43%. “Processors have to deliver a milk of 36cpl for May. There is no justification for anything less,” he concluded.