Milk is one of the most important commodities in the agricultural industry, and its price has a significant impact on farmers, processors, and consumers alike. The Ornua Purchase Price Index (PPI) is a key indicator of milk prices in Ireland, and its latest figures for March paint a worrying picture for the dairy industry. Despite some positive trends in recent months, the PPI has seen another significant slip, further heightening concerns about the long-term sustainability of milk production in the country. In this article, we will examine the factors behind this latest decline and what it means for those working in the sector.
The PPI for Ornua has dropped significantly, suggesting that milk prices have decreased by around 4c/L.
Ornua PPI for March is 136.8, showing a decline from February’s 149.4 figure.
Member co-op processing costs, estimated at 7.9c/L and excluding member margins, indicate a return of 41.1c/L inclusive of VAT from Ornua product portfolio.
There is a decline in the indicative return from 45c/L during February’s milk supplies.
The processing cost’s energy cost component is variable and changes every month depending on energy costs.
In addition, Ornua’s value payment payable to members in March is €4.1 million, which equals 3.2% of gross purchases for the month and 2.6% year-to-date.
Ornua stated that the declining market situation resulted from higher global milk supplies and poor demand.
Financials announced by milk processors
In related news, two of Ornua’s member processors have revealed their latest financial results today, on April 12, Wednesday.
According to their latest financial results, Dairygold Co-op’s turnover has soared by more than €477 million to a record €1.65 billion in 2022.
Its operating profits also surged by €9.8 million to €40.2 million last year. Dairygold’s chairperson, Seán O’Brien, said that the year had been one of unprecedented increases in commodity prices, heavily influenced by the war in Ukraine.
“The buoyant markets led to record milk and grain prices, but on the cost side, higher energy, fertiliser and feed prices, significantly impacted the cost of production.
He stated, “However, the higher market returns ensured a very successful year for Dairygold and its members.”
In the meantime, operating profit at Lakeland Dairies reached €32.5 million in 2022, an increase of €4.3 million (15 percent).
The cross-border dairy processor’s financial results showed a 45% increase in revenues to €1.9 billion in 2022, representing a €590 million increase from the previous year’s figure of €1.3 billion.
In conclusion, the recent drop in Ornua PPI for March is yet another reminder of the unpredictable and volatile nature of the dairy industry. While a slight increase in milk prices was observed earlier this year, this positive trend has since been reversed. With global market conditions still uncertain, it is difficult to predict when or if milk prices will start to rise again. For now, dairy farmers must continue to weather the storm and hope for better days ahead.
