The Irish Farmers' Association (IFA) has called on retailers to return an additional 7c/L to fresh milk farmers this winter to help offset rising input costs. The farm organisation also urged grocers to stock farmer-owned dairy brands and encouraged consumers to look for milk bearing the National Dairy Council logo.
IFA liquid milk chair Henry Dunne said processors’ premiums for liquid milk production had been eroded by the considerable decline in the base milk price over the past two years. He said the organisation is seeking a fairer share of the existing retail price.
The IFA said producing a year-round supply of fresh milk requires extra labour and incurs substantial additional costs. It warned that fresh milk farmers are facing higher costs while the farmgate price for milk remains low.
Processor premiums and retail concentration
According to the IFA, seven milk processors handle the majority of Ireland’s fresh milk and pay a premium above the standard manufacturing milk price. The organisation said five major supermarket retailers dominate the grocery market, with a combined share of 94%.
The IFA added that an estimated 70% of retail fresh milk sales are now private label, sold at an estimated average discount of 15% compared with farmer-owned brands. Private-label milk sells at a lower price than branded milk, it said.
The organisation said persistent pressure to cut prices has squeezed margins for fresh milk producers. It said there are now 66% fewer producers, at 1,094, than in 1995, when there were 3,344.
The request focuses on the share of the existing retail price that reaches fresh milk farmers. The IFA links the pressure on suppliers to the erosion of liquid milk premiums, the dominance of a small number of retailers and the large share of private-label sales. The IFA cited those figures in setting out its case for a larger return to fresh milk farmers.
Calls to the National Milk Agency and regulator
The IFA called on the National Milk Agency to ensure fresh milk farmers are adequately compensated. It also urged the Agri-Food Regulator to bring transparency to producer, processor and retailer margins.
The National Milk Agency was established under the Milk (Regulation of Supply) Act, 1994 to regulate the supply of milk for liquid consumption throughout the state.
The IFA’s intervention is aimed at the winter period and at the retail chain rather than at a single processor. It asks retailers to return more of the existing price to farmers, asks grocers to stock farmer-owned brands, and asks consumers to identify milk carrying the National Dairy Council logo.