After much wrangling, it looks like Ornua’s milk price tracker, the Purchase Price Index (PPI), is set for a revamp, with co-op bosses calling for the assumed cost of processing milk to be increased. Since its inception, the PPI has become a key benchmark for Irish farmers in terms of milk price transparency. The PPI tracks the market returns of the typical mix of Irish dairy products such as butter, cheese, whole milk powder and protein products. It then translates this into an estimated farmgate price for milk, giving farmers a decent idea of what milk price they can expect from their co-op.
After much wrangling, it looks like Ornua’s milk price tracker, the Purchase Price Index (PPI), is set for a revamp, with co-op bosses calling for the assumed cost of processing milk to be increased. Since its inception, the PPI has become a key benchmark for Irish farmers in terms of milk price transparency.
The PPI tracks the market returns of the typical mix of Irish dairy products such as butter, cheese, whole milk powder and protein products. It then translates this into an estimated farmgate price for milk, giving farmers a decent idea of what milk price they can expect from their co-op.
However, the PPI has been the cause of significant unrest around the Ornua board table in recent months. Since the beginning of the COVID-19 pandemic, co-ops have cut prices for March and April milk to reflect the sudden weakness in global dairy markets. The PPI has also fallen in March and April to reflect this downturn.
However, European dairy markets have since rallied and the most recent PPI published last week by Ornua showed an increase in market returns for May to an equivalent milk price of 29.9c/l including VAT.
It’s understood this increase in the PPI caused anger at co-op level as it fuelled farmer expectation of an increase in May milk prices. The Dealer understands that Ornua held a board meeting on Wednesday morning and the issue of the PPI was discussed in detail.
While no details have been released, it’s understood co-op bosses are pushing hard for a revamp of the PPI which would see an increase in the assumed costs of processing milk. Currently, Ornua assumes a cost of 6.5c/l for milk processing but co-ops feel this is too low.
Although farmer board members at Ornua have staunchly backed the continued publication of the PPI it looks like changes are on the cards.
This is a subscriber-only article
SHARING OPTIONS: