The Irish Creamery Milk Suppliers' Association (ICMSA) has said it is "expecting" an increase of 1c/L - and "possibly more" - in milk price paid by processors and co-ops to dairy farmers for January.

The chairperson of the association's dairy committee, Noel Murphy, suggested that those co-ops with lower prices than others will "feel the pressure to move upwards".

According to Murphy, the last month has seen further strengthening across the full range of products as supply "stood still or even fell back slightly" in the face of consistent demand.

He claimed that the only "dark cloud" on the horizon was "the prospect of tariffs or the slide into a mutually damaging trade war", referencing US president Donald Trump, who has frequently threatened the use of tariffs on goods exported from the EU to the US.

However, Murphy said that this threat "can not hold back the [1c/L] rise due" to dairy farmers.

"The Ornua PPI [Purchase Price Index] is showing a half-a-cent per litre increase, but that is demonstrably lagging, mainly because their methodology excludes value payments," he said.

"The ICMSA fully expects the co-ops to pay the extra cent-per-litre that the underlying data and January return show. The processors got paid more last month and they have to pass back their suppliers' share of those better prices," Murphy added.

"Production costs are already at near-historical highs and there’s no point in better milk prices if those companies are simply allowed to jack-up their prices and eat up what should be a small extra for the farmer," the ICMSA dairy chair said.

Last week Ornua confirmed that the PPI for the month of January is 161.9 – up on the December index of 159.3.

After deducting estimated processing costs, Ornua’s PPI implies an indicative return of 48.3c/L, including VAT for milk of 3.6% fat and 3.3% protein.

This represents an increase from the previous month of 47.6c/L.

According to Ornua “the results reflect strong market returns for the month of January”.