Ornua index increases for August

Ornua has just released the August purchasing price index (PPI). It lifted slightly from 101.7 to 101.8, reflecting the steady market for a basket of dairy products.

When we adjust for separation of the Ornua value premium for August, it brings the ex-VAT price to 29.1c/l, up from 28.7c/l in July.

For the July Irish Farmers Journal monthly milk league, the average price at base solids was 29.3c/l, ranging from 30.2c/l for the west Cork co-ops down to between 29c/l and 28.6 c/l for the big players Kerry, Dairygold and Glanbia.

This month, the Ornua value payment payable to members was €3.4m

This is the second month of the new revised Ornua index signed off by the board of Ornua.

The revised index increased the assumed processing cost to 7c/l and separated out the Ornua value premium into a monthly payout, as opposed to the annual Kerrygold premium.

Comparable

While the Ornua index is just that, an index, it, and the Ornua value premium, can be converted into a cent-per-litre figure to make it comparable and understandable for farmers.

This month, the Ornua value payment payable to members was €3.4m.

Severe cuts

“Those processors who failed to increase their price last month have to step up this time. Markets have remained much steadier than some of the predictions we heard at the onset of COVID-19,” IFA dairy committee chair Tom Phelan has said.

“The price cuts in April and May came too soon and were too severe. As the markets didn’t suffer as much as expected, co-ops should have reserved to increase the prices paid out to farmers.”

The IFA has said that because of recent weather conditions, production costs on dairy farms have increased and farmers need the maximum returns.

“Some co-ops have the capacity to improve returns and lift themselves off the bottom of the price table. Suppliers expect the August price to reflect this,” Phelan concluded.

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