The Irish Farmers' Association (IFA) has urged retailers to return an additional 7c/L to fresh milk farmers this winter, saying producers face higher costs while the farmgate price for milk remains low.
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. It said producing a year-round supply of fresh milk requires extra labour and incurs substantial additional costs.
Processor 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,” he said.
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. The organisation said five major supermarket retailers dominate the grocery market with a combined share of 94%.
Private-label pressure
The IFA estimated that 70% of retail fresh milk sales are now private label, sold at an estimated average discount of 15% compared with farmer-owned brands. It said private-label milk sells at a lower price than branded milk.
The organisation said persistent pressure to cut prices had reduced margins for fresh milk producers to the point that there are now 66% fewer producers (1,094) than in 1995 (3,344).
In making its case for a larger share of the existing retail price, the IFA focused on the structure of the fresh milk chain rather than on a new consumer price measure. It said the premium paid for liquid milk production had been squeezed as the base milk price fell, leaving the additional costs of year-round fresh milk supply exposed.
Calls to regulators
The IFA 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 statement set out a dual focus: a short-term appeal for a 7c/L return to farmers this winter, and a longer-running argument about how margins are shared among producers, processors and retailers. It linked the pressure on fresh milk producers to the growing share of private-label sales and to the concentration of grocery retailing in five major chains.
It also pointed to the shrinking number of fresh milk producers as evidence of the effect of price pressure. According to the organisation, the count has fallen from 3,344 in 1995 to 1,094, a decline of 66%.
The IFA did not say in the statement how the additional 7c/L would be applied at retail level, but its language focused on a fairer distribution of the current retail price. The organisation's requests to the National Milk Agency and the Agri-Food Regulator are aimed at compensation for farmers and transparency across the chain.