The Irish Farmers' Association (IFA) has urged retailers to return an extra 7c/L to fresh milk farmers this winter to help offset rising input costs. The farm organisation also called on grocers to stock farmer-owned dairy brands and encouraged consumers to look for milk bearing the National Dairy Council logo.
According to the IFA, producing a year-round supply of fresh milk requires extra labour and incurs substantial additional costs. The organisation warned that fresh milk farmers are facing higher costs while the farmgate price for milk remains low.
Processor premiums under pressure
Henry Dunne, the IFA's liquid milk chair, 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 was seeking a fairer share of the existing retail price.
The IFA said seven milk processors handle the majority of Ireland's fresh milk and pay a premium above the standard manufacturing milk price. It also said five major supermarket retailers dominate the grocery market, with a combined share of 94%.
Private label dominates retail sales
An estimated 70% of retail fresh milk sales are now private label, according to the IFA, sold at an estimated average discount of 15% compared with farmer-owned brands. The organisation said private-label milk sells at a lower price than branded milk.
The IFA argued that the structure of the retail market and the pressure to cut prices have combined to squeeze fresh milk producers. It said persistent pressure to cut prices has reduced margins to the point that there are now 66% fewer producers than in 1995 — 1,094 compared with 3,344.
The organisation's figures place the debate in the context of a concentrated retail market and a fresh milk supply base that has contracted sharply since the mid-1990s. It is asking retailers to return more of the existing retail price and regulators to examine how margins are shared.
Calls for regulatory action
The organisation called on the National Milk Agency to ensure fresh milk farmers are adequately compensated. It also called on 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 request covers the retail price paid by consumers and the margin retained within the supply chain. It wants retailers to return an additional 7c/L to farmers, and it wants the regulatory system to make the division of margins between producers, processors and retailers more transparent.
For the IFA, the immediate issue is the share of the retail price that reaches farmers who maintain year-round fresh milk output. Its requests are directed at retailers, processors and regulators, with the organisation arguing that higher production costs and low farmgate prices have left fresh milk suppliers under pressure.