The PPI for January has been set at 105.4, which is up 1.6 points for the December 2016 figure. The last time the PPI was this high was in September 2014 and milk price averaged 30.6c/l (€4.30/kgMS).

This equates to a farm gate price of 29.8c/litre. Ornua says the January PPI “reflects lower SMP and butter returns in the month, offset by higher cheese and whey power prices”.

This is also the seventh consecutive month of growth for the PPI. It comes on the back of a 1.3% increase in Tuesday’s Global Dairy Trade auction in New Zealand.

In the coming days, dairy co-ops will start setting milk prices for January.

Co-ops must pay more

IFA dairy committee chair Seán O’Leary has said the increase in the PPI must be realised at co-op boardroom level. O’Leary said an increase of 1c/l is the minimum farmers must receive for milk supplied in January.

“Most co-op boards will be meeting this week and next to examine milk prices payable for January. They must make sure the new increased 5.4% VAT rate benefits the farmers fully, and pass back a fully justified increase of at least 1c/l – more for the lower payers including Kerry – back to support their milk suppliers’ essential income recovery before peak,” he said.

Cashflow concerns

Chair of ICMSA’s dairy committee Gerald Quain has also called for a 1c/l increase for January milk.

“We’d be looking at a rise of 1c/l, giving an average of 31c/l for January milk.

“We know that co-ops realise that cashflow is a major issue on dairy farms at this time of year and coming after the milk price depression in 2016, every cent counts. We think and trust that against the background of continuing gains and strengthening of dairy markets, co-ops will deliver the price rise that the facts support,” Quain said.

The Irish Farmers Journal calculates milk price minus VAT.

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