UFU Milk Price Indicator (MPI) Shows Scope for Sustained Higher Producer Prices

Thursday, 4 July, 2013

Ulster Farmers’ Union Dairy Chairman Andrew Addison is calling on dairy processors to pay more to their suppliers for their milk.  The call comes after the UFU analysed the first two months Milk Price Indicator (MPI) figures, which has been designed to give dairy farmers an indicative value of what the market is capable of returning for our typical Northern Ireland dairy product mix, against what producers are being paid by their processors. 

Andrew Addison said; “While we acknowledge that the gap between what local dairy processors are paying and the UFU MPI has narrowed recently, there are still a number of processors falling considerably shorter than others.  When we launched our MPI at the end of April, the gap between the base prices being paid by dairy processors and the UFU MPI was significant, as much as 6p per litre, and although this gap has diminished recently there are still some processors who are paying their farmers considerably less than others.”

The MPI is based on the analysis of up to date dairy prices in the local, European and global dairy markets and it also factors in an estimate for collection, processor costs and margins.  It draws on these publically available prices to provide 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.  

While dairy product markets are currently relatively stable, higher prices should be realised on the back of balanced powder markets, local and global production levels still catching up after significant dips, falling New Zealand imports (down around 60% from 33,000 to 12,000 tonnes year-on-year for Q1 of 2013) and sustained demand from export markets.  

The UFU Dairy Chairman concluded; “The indication is that markets can deliver a higher farmgate price than is currently being paid over a sustained period and there is an expectation that milk processors can and should deliver this.”   
 UFU Milk Price Indicator (MPI) Figures since launch
 
                         UFU MPI (pence per litre)
11/05/2013    33.55
25/05/2013    32.50
08/06/2013    32.71
22/06/2013    32.77
06/07/2013    32.79