The Irish Farmers' Association (IFA) has urged retailers to return an additional 7c/L to fresh milk farmers this winter, saying the payment would 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.” It warned that fresh milk farmers are facing higher costs at a time when the farmgate price for milk remains low.
Premiums eroded
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. “A fairer share of the existing retail price is what we are seeking,” Dunne said.
The IFA said seven milk processors handle the majority of Ireland's fresh milk and pay a premium above the standard manufacturing milk price. That structure, the organisation argues, means the fresh milk sector relies on a premium that has narrowed as the base price has fallen.
Retail concentration and private label
The organisation also pointed to concentration in grocery retail. It said five major supermarket retailers dominate the grocery market, with a combined share of 94%.
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, according to the IFA. Private-label milk sells at a lower price than branded milk, it added.
The IFA said persistent pressure to cut prices had reduced margins for fresh milk producers. It said there are now 66% fewer producers — 1,094 — than in 1995, when there were 3,344.
Calls to regulators
The IFA has called on the National Milk Agency to ensure that 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 framed the request as a fairer share of the existing retail price and linked it to the roles of processors, retailers and regulators. Its focus is the fresh milk segment, where it says the cost of year-round production is not being reflected in returns to farmers.