The latest Ornua Purchase Price Index (PPI) has revealed a decline in milk prices for the month of July. Ornua, the Irish dairy cooperative, confirmed on Thursday, August 10, that the PPI figure for July stood at 121.3, down from 124 in the previous month. Taking into account estimated co-op processing costs of 7.5c/L, including variable energy costs, and excluding any allowance for processor margins, the latest index figure suggests an indicative return of 35.9c/L, including VAT. This represents a decrease of 0.8c compared to June’s price of 36.7c/L. Ornua also announced that its value payment to member co-ops in July amounted to €7.7 million, which accounted for 4.7% of gross purchases for the month (4.3% for the year to date). According to Ornua, the PPI for July reflects weak market returns and weaker demand throughout the month.
In related news, Kerry Group, an Irish food company, has introduced a forward price scheme for its suppliers. The scheme offers a price of 33.5c/L, inclusive of VAT, for milk with a protein content of 3.3% and butterfat content of 3.6%. It covers the period from March to October 2024 and includes a feed and fuel price adjustor. Kerry Group stated that the adjustor helps protect participants from inflationary input prices during the scheme’s duration. The company added that this feature provides farmers with protection against unexpected increases in compound feed and energy prices, ensuring greater stability in their financial planning. The scheme opened for applications on Wednesday, August 9, at 2:00 p.m. and closed on Thursday, August 10, at 2:00 p.m. The price offered in the scheme is 3.5c lower than Kerry Group’s most recent monthly milk price of 37c/L for June supplies, which was announced in mid-July.
These developments in the Irish dairy industry highlight the challenges faced by farmers in the current market. The drop in milk prices reflected in the Ornua PPI for July indicates a continued downward trend, which may impact farmers’ profitability. The value payment made by Ornua to member co-ops also demonstrates the financial strain experienced by dairy farmers. The introduction of Kerry Group’s forward price scheme offers some stability and protection for suppliers, allowing them to plan their finances with greater confidence. However, the lower price offered in the scheme compared to the most recent monthly milk price may still pose a challenge for farmers. As the dairy industry continues to navigate market fluctuations and changing consumer demands, it is crucial for farmers to explore various pricing options and strategies to ensure their long-term sustainability.