The Irish Farmers' Association (IFA) has urged retailers to return an additional 7c/L to fresh milk farmers this winter, arguing that producing a year-round supply of fresh milk requires extra labour and incurs substantial additional costs.
The farm organisation also called on grocers to stock farmer-owned dairy brands and encouraged consumers to look for milk carrying the National Dairy Council logo. It said the extra return was needed to help offset rising input costs at a time when the farmgate price for milk remains low.
The IFA said the extra 7c/L should be returned from the existing retail price, and it framed the request as a matter of distributing that price more fairly rather than seeking a higher retail price. It said fresh milk farmers are facing higher costs while the price they receive remains low. The organisation said the current structure leaves producers exposed to cost increases without a corresponding increase in farmgate returns.
Processor premiums eroded
Henry Dunne, the IFA's liquid milk chair, said processor premiums for liquid milk production had been eroded by the considerable decline in the base milk price over the past two years. He said the organisation was seeking a fairer share of the existing retail price.
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 distinguishes fresh liquid milk from standard manufacturing milk and argues that the premium for liquid milk has been undermined by the fall in the base price.
The organisation said five major supermarket retailers dominate the grocery market with a combined share of 94%. It estimated that about 70% of retail fresh milk sales are now private label, sold at an average discount of 15% compared with farmer-owned brands. Private-label milk sells at a lower price than branded milk, the IFA said.
Producer numbers fall
The IFA said persistent pressure to cut prices had squeezed margins for fresh milk producers to the point that there are now 66% fewer producers than in 1995. It put the current number at 1,094, compared with 3,344 in 1995.
The association called on the National Milk Agency to ensure fresh milk farmers are adequately compensated and 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 noted.