The Irish Creamery Milk Suppliers Association (ICMSA) has called on Ornua to explain why it has increased the estimated processing costs for its monthly purchase price index (PPI).

The PPI for the month of February 2024 is 131.5, up from the previous month at 125.1, to the equivalent of 35.35c/l, excluding VAT.

Ornua said the price was based on updated member co-operatives’ processing costs at 9.4c/l, an increase from 7.5c/l in the previous month.

This increase, it said, was based on updated methodology which came into effect on 1 March and on Ornua’s estimate of the average cost of processing the Ornua basket of products, which is not representative of any individual member co-op processor. It excluded any allowance for member co-op processor margin.

'Anger'

ICMSA dairy committee chair Noel Murphy said there is huge anger among dairy farmers in relation to the change and he called on Ornua to provide the complete data behind such an increase.

Murphy said that farmers find it extraordinary that processing costs can increase by so much at a time when energy costs - a very significant element of cost - have seen significant reductions for over six months.

Pressures

“The reality of the pressures facing farmers seems to be lost on Ornua. Do they even know or care that many are still producing milk below the cost of production?

"The 22% reduction in January milk supply should be a wake-up call for Ornua and processors that all is not well on the farm.

"To introduce such a change at a time when farmers are under enormous pressure due to weather, costs, low milk prices and the ongoing negative impact of changes to the nitrates regulations shows a frankly alarming disconnect between Ornua and the dairy farmers producing the milk that is the basis for everything else,” he said.

The ICMSA has called on Ornua to publish the full data, the method of collecting the data, and confirm whether the data was independently reviewed and verified.

Murphy said that the 1.9c/l increase for a farmer supplying 400,000 litres is equivalent to €7,600 per annum which is a huge amount. He said that farmer-suppliers to Ornua deserve a much better explanation than just a perfunctory email informing the press of the change.

“We are going to insist that farmers get the detailed data behind this decision and independent confirmation that it is correct,” he said.