The Ulster Farmers’ Union have now completed its first annual review of the UFU’s Milk Price Indicator (MPI) and have made a few changes to enhance the robustness of the MPI model.
UFU Dairy Policy Chairman Jonathon Moore said; “The UFU MPI has played an important and effective role over the last 12 months, providing a pence per litre figure with supporting analysis to give local dairy farmers an indicative value of what the market is capable of delivering. The resulting changes to the UFU MPI are reflective of recommendations made following the Dairy Co/AHDB review of AMPE (Actual Milk Price Equivalent) and MCVE (Milk for Cheese Value Equivalent) and will maintain the consistency which the MPI has with these other market measures. From our findings, the final result has produced a model which we believe is fit for purpose in meeting the challenges of on-going price volatility.
“As far as processing costs are concerned, in line with AMPE and MCVE we have amended the MPI on how processor costs are deducted. The original MPI simply deducted 3 pence per litre for general processor costs from all included commodities; however, as is the case for AMPE and MCVE we have now aligned each dairy commodity with its own processing cost. Profit margins have also been removed altogether. This is in line with the Dairy Co/AHDB decision to not include a profit element in AMPE or MCVE. Transport costs have also been omitted as we feel that this should be considered alongside the MPI rather than within the calculation itself. This approach has also been taken by Dairy Co/AHDB in their review and is consistent with other international milk price indicators. Margin of error is the final cost to be excluded as this was only to be included for one year whilst we got the MPI established.”
Mr Moore concluded; “The UFU MPI has played an important role over the 12 months, providing local dairy farmers with an indication of the value of the milk they are producing rather than an absolute value. The changes which we have implemented will enhance an already robust trending model providing producers with an understanding of the direction of commodity markets and their impact upon local prices.”
The latest UFU MPI figure will continue to be published on a fortnightly basis and currently sits at 30.08 pence per litre.
