The Irish Farmers' Association (IFA) has called on grocery retailers to return an additional 7c/L to farmers producing fresh milk this winter, arguing that the payment is needed to help offset rising input costs.
In a statement issued on Tuesday, November 3, the organisation directed requests at three groups along the chain:
- Retailers: return an extra 7c/L to fresh milk suppliers;
- Grocers: stock dairy brands that are owned by farmers;
- Consumers: look for milk carrying the National Dairy Council logo.
The IFA said that producing a year-round supply of fresh milk requires extra labour and incurs substantial additional costs, and it warned that fresh milk farmers are facing higher costs while the farmgate price for milk remains low.
Liquid milk, the milk supplied for drinking rather than for processing, is the segment the association's requests address, and processors pay a premium for it above the standard manufacturing milk price.
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 association's objective as a fairer share of the existing retail price, framing the request around how the price already paid at the till is divided rather than around a higher price for shoppers.
Seven processors, five retailers
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. On the retail side, five major supermarket groups dominate the grocery market with a combined share of 94%.
The organisation estimated that about 70% of retail fresh milk sales are now private label, sold at an average discount of roughly 15% compared with farmer-owned brands, and that own-label milk sells for less than branded milk.
Producer numbers down two-thirds
The IFA said persistent pressure to cut prices has narrowed margins for fresh milk producers to the point that there are now 66% fewer of them than in 1995, at 1,094 producers against 3,344 that year. It cited the fall in producer numbers as evidence of what sustained price pressure has done to the sector.
Calls to agency and regulator
The association has asked the National Milk Agency to ensure that fresh milk farmers are adequately compensated, and has called on the Agri-Food Regulator to bring transparency to the margins taken by producers, processors and retailers.
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.