The Irish Farmers' Association (IFA) has urged retailers to return an additional 7 cent per litre to fresh milk farmers this winter, saying the sector needs support to offset rising input costs. The farm organisation also wants grocers to stock farmer-owned dairy brands and is encouraging consumers to look for milk carrying 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 said this year-round requirement is central to the cost structure of liquid milk production. It warned that fresh milk farmers are facing higher costs while the farmgate price for milk remains low, leaving producers exposed despite the premium normally paid for liquid milk.
Processor premiums under pressure
Henry Dunne, the organisation'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 said the IFA is seeking a fairer share of the existing retail price for fresh milk farmers.
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 argued that the structure of the retail market is making it difficult for those premiums to be reflected back to farmers.
Retail concentration and private label
The organisation said five major supermarket retailers dominate the grocery market, with a combined share of 94%. It estimated that around 70% of retail fresh milk sales are now private label, sold at an average discount of about 15% compared with farmer-owned brands. Private-label milk sells at a lower price than branded milk, it added.
IFA linked persistent pressure to cut prices with a sharp reduction in the number of fresh milk producers. It said there are now 1,094 producers, 66% fewer than the 3,344 recorded in 1995, pointing to the cumulative effect of margin pressure on the sector.
Calls to regulators
The IFA has called on the National Milk Agency to ensure that fresh milk farmers are adequately compensated. It also asked the Agri-Food Regulator to bring transparency to the margins of producers, processors and retailers, so that the division of the retail price can be more clearly understood.
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 puts the agency and the regulator at the centre of its case for a better return to fresh milk farmers.