There is a difference of €128/cow when we compare the difference between the Ornua purchase price index (PPI) milk price equivalent and the average milk league price paid out in 2021.

Now that the December milk cheques have been paid, Irish Farmers Journal analysis of total 2021 prices estimates that the gap between what was paid by the co-ops and what Ornua says it got from the market in total in 2021 widened as the year progressed.

The analysis shows the gap was 4.55c/l in December.

When we compare the difference each month and apply it to a seasonal supply curve for a 500,000-litre supplier, we calculate a difference equivalent to €128/cow between the average monthly milk cheque and what the Ornua equivalent market price indicator is.

This excludes conditional bonuses paid by the co-ops.

The Ornua index assumes a processing cost as part of the exercise and, last year, the processing costs used in the equation increased to reflect higher costs at processor level. Dairy processors have argued that the Ornua index includes some non-Irish dairy, that it doesn’t include a processor margin, and that processing costs have increased further.

West Cork co-ops on top

The total base milk price pay-out to dairy farmers in 2021 can now be estimated as December milk cheques have been paid.

Some co-ops may yet make annual top-up payments.

We estimate the recently announced west Cork top-up, 0.5c/l on total 2021 supply, has pushed the west Cork co-ops back out on top when we compare a seasonal supply for a 500,000-litre supplier. This excludes all conditional payments.

Preliminary analysis shows Drinagh Co-op coming out on top, followed by the other three west Cork co-ops and then Lakeland Dairies.

Aurivo’s top-up on quarter one 2021 supplies pushes it in behind Lakeland, ahead of Dairygold Co-op.