Lakeland Dairies has cut its milk price by 0.5c/L for May supplies, bringing the price for the month to 24c/L including VAT.

A spokesperson for the co-op told Agriland that this price, which was set yesterday, includes an Ornua bonus of 1c/L following the sale by Ornua of its majority stake in DPI Foods in the US.

For April supplies, Lakeland Dairies milk price was 24.5c/L and the co-op had cut its milk price for March by 1c/L.

Last week, the IFA’s Dairy Committee told co-ops setting the May milk price to take a leaf out of Friesland Campina’s book and hold their milk price.

IFA Dairy Chairman, Sean O’Leary, said that there is now clear evidence that international dairy markets are strengthening from their unsustainably low levels.

Co-ops have recognised on the record that they will continue to need to support milk prices, and in the short term, this has to mean holding for May milk, according to IFA.

“Cash flow is lacking on most dairy farms at this stage. The milk price is at a historical low and input bills, superlevy and loan repayments all have to be found from what are now negative margins on the majority of dairy farms.”

Earlier this week, the Ornua Purchase Price Index (PPI) for May fell to 80.8 points – the fourteenth consecutive drop of the index.

The PPI is a monthly indicator of market returns on dairy products (butter, cheese and whole milk powder) sold by Ornua.

The May return is down 18% on the same month in 2015 and back 35% on May 2014.

In April of this year, the PPI dropped to 81.4 points, while it stood at 84.2 points in March.

May’s PPI drop now means that the market indicator has declined by nearly 6% since the beginning of the year.