UFU launches Milk Price Indicator

Thursday, 25 April, 2013

At a press conference today (25 April), the Ulster Farmers’ Union has officially launched the UFU Milk Price Indicator (MPI). The UFU MPI is a pence per litre figure that will be published fortnightly with supporting analysis and has been designed to give dairy farmers an indicative value of what the market is capable of delivering.

UFU President Harry Sinclair said; “With the United Dairy Farmers milk auction ending in January, dairy farmers have been operating in a knowledge vacuum when it comes to milk pricing. The aim of the UFU MPI is to fill this knowledge gap and give farmers some guidance on what the market is capable of returning when they are selling their milk to processors.”

The UFU MPI figure is calculated based on an average tanker of milk, approximately 28,000 litres, and that that milk is sold to a fictitious dairy processor making cheese; whey powder; butter; whole milk and skimmed milk powder. The UFU MPI is based on the analysis of dairy prices in the local, European and global dairy markets. The actual MPI calculation is a hybrid of existing industry recognised market calculations AMPE (Actual Milk Price Equivalent) and MCVE (Milk for Cheese Value Equivalent). It also factors in an estimate for processor costs, processor margins, as well as a collection cost, exchange rate movement and 3% margin of error. 

UFU Deputy President Ian Marshall said; “The UFU MPI, which has closely correlated with the Fonterra WMP and United Dairy Farmers’ auctions for the past three years data, will be an extremely useful tool for dairy farmers when it comes to selling their milk to processors. Based on up to date information, it offers a guideline of what the market can return and will allow dairy farmers to compare this with the prices they are receiving from their processor. The cost of production is rapidly rising across all farming sectors and dairy is no different. It is essential that our dairy farmers receive a fair price for their milk.”

The UFU Milk Price Indicator has been set today (25 April) at 33.45 pence per litre for March milk (April payment). The next UFU MPI figure will be published on the 10 May 2013.
The UFU Milk Price Indicator will be published on a Friday fortnightly, with supporting analysis, on the UFU website; in the UFU members’ Bulletin; and will appear in UFU Watch in that Saturday’s Farming Life.