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, setting out the request alongside a warning that fresh milk farmers are facing higher costs while the farmgate price for milk remains low. The organisation said producing a year-round supply of fresh milk requires extra labour and incurs substantial additional costs.
The appeal addresses three audiences at once: retailers, asked to pass the extra 7c/L back to farmers; grocers, urged to stock farmer-owned dairy brands; and shoppers, encouraged to look for milk carrying the National Dairy Council logo when buying fresh milk.
Processor premiums eroded
Henry Dunne, the IFA's liquid milk chair, said processors' premiums for liquid milk production have been eroded by the considerable decline in the base milk price over the past two years. He described the request as a claim on “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.
Concentrated retail market
The organisation pointed to a highly concentrated grocery sector, saying five major supermarket retailers dominate the market with a combined share of 94%. An estimated 70% of retail fresh milk sales are now private label, it added, sold at an estimated average discount of 15% compared with farmer-owned brands.
Private-label milk sells at a lower price than branded milk, the IFA said, and persistent pressure to cut prices has reduced margins for fresh milk producers. In the organisation's account, the retail price paid by shoppers is where a fairer distribution of value should begin.
The IFA argues that a combination of private-label dominance and discounting leaves producers with little room to absorb cost increases while maintaining a year-round supply.
Producer numbers down 66%
The IFA said there are now 66% fewer fresh milk producers than in 1995: 1,094 today compared with 3,344 at the earlier count. The organisation cited the decline as evidence of what sustained pressure on prices does to the production base.
Calls to regulators
The organisation has asked the National Milk Agency to ensure that fresh milk farmers are adequately compensated, and 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.
Taken together, the organisation's requests run on two tracks: a near-term transfer through the retail price this winter, and longer-term transparency through the regulators so that margins at each stage of the chain can be seen.