Farmers to get ‘useful’ IDB guides to performance of dairy products

FARMERS will get monthly and quarterly guides to the performance of dairy products with a new Purchasing Price Index from the Irish Dairy Board.

While the IFA and ICMSA will continue to use their alternative sources of market intelligence on milk price per litre, the farm groups broadly agree that the new IDB index could be a useful extra tool for the Irish agri-food industry.

The index is primarily a guide for the IDB’s own members. It takes as its base guide the 2010 average monthly price for the basket of products (butter, cheese etc) which are marketed by the IDB. Thus, the index for 2010 is taken as being 100 (or “the 100% price”).

As the price for spring 2011 was up 7.5% on 2010, that increase is indicated with a 107.5 yellow line as the quarterly average for the three months of Q1 2011. The index is already suggesting that Q2 2011 will be up 10% versus 2010, or a price of 110 on the index. The blue line shows the monthly variations thus far in 2011.

For the IDB, this new comparative reporting will ensure that it does not give away confidential information on prices to its competitors. The group will wait until the end of 2011 before deciding whether to keep 2010 as its base year in future indices, or whether it would be better to “re-base” at the end of each year.

An IDB spokesperson said: “This index is a useful tool for our members to look at the markets. It will be quoted on our website and our literature on the fifth day of every month.”

The IDB’s index now also reflects the more prominent role of cheese in its portfolio. The IDB basket comprises: cheese (41%), butter and skim (35%), WMP (8%), other (16%).

The IDB conducts the overseas marketing for just over 60% of Irish dairy output, with Kerry Group and Glanbia being notable exceptions in conducting their own marketing.

Because of this, the Dairy Board believes its prior index was less useful as a market indicator for its members. The IFA accepts that the new index does provide more useful data than was previously available on the IDB’s basket of products.

IFA national dairy committee chairman Kevin Kiersey said: “I understand the commercial sensitivities which have led the IDB to make this change. However, the departure from an information flow which could relatively easily be converted into cents per litre, to be made relevant to farmers, will be challenging. In particular, I am concerned that the new index should not be used by co-ops to muddy the water on milk prices and confuse farmers.”