Irish Milk Price Index Edged Higher in August

Ireland’s milk price index edged higher in August, although the farmgate-equivalent return derived from the underlying product basket stayed at 36.2 cents per litre. That indicative figure included standard value-added tax of 4.5%.

The calculation used raw milk standardised at 3.6% butterfat and 3.3% protein. The August result meant that gains in downstream wholesale values did not produce an immediate increase in baseline milk payments. The valuation was unchanged from July.

Processing deductions were estimated at 10 cents per litre, the same level as in the previous calculation. The deduction represents the average cost of turning raw milk into products suitable for export. It is linked to external indices, particularly commercial energy benchmarks, and is revised quarterly rather than according to the manufacturing performance of an individual co-operative.

The benchmark excludes co-operative operating margins. It therefore measures core processing and transformation overheads without including the return retained by the co-operative. The deduction is applied separately from the farmgate-equivalent price derived from the product basket.

Monthly trade settlements produced €7.2m for member co-operatives. That amount was equivalent to about 6% of gross dairy purchases during the monthly period. The index is based on finished-product deliveries and invoicing schedules, so its financial measures do not coincide exactly with the timing of physical milk collections.

The timing difference reflects seasonal production patterns. The monthly distribution provided balance-sheet support to participating co-operatives as seasonal flush volumes in the northern hemisphere declined towards autumn levels.