The Irish Farmers' Association (IFA) has urged retailers to return an extra 7c/L to fresh milk farmers this winter to help offset rising input costs at farm level.
The farm organisation also called on grocery retailers to stock farmer-owned dairy brands, and encouraged 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 warned that fresh milk farmers are facing higher costs while the farmgate price for milk remains low.
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. “A fairer share of the existing retail price is what we are seeking,” he said.
Squeezed margins in liquid milk
The IFA said seven milk processors handle the majority of Ireland's fresh milk and pay a premium above the standard manufacturing milk price. At retail level, it said five major supermarket chains 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 average discount of about 15% compared with farmer-owned brands, the organisation added. Private-label milk, it said, sells at a lower price than branded milk.
The organisation's argument centres on how the existing retail price is divided rather than on asking shoppers to pay more: the 7c/L it is seeking is a redistribution of value along the chain. Because the liquid milk premium is set on top of a base price that has fallen sharply, the IFA contends that the added cost of year-round fresh milk production is no longer being covered by the returns farmers receive.
Persistent pressure to cut prices has squeezed margins for fresh milk producers to the point that there are now 66% fewer producers than in 1995 — 1,094 today, compared with 3,344 then, according to the IFA.
Regulators pressed to act
The IFA has 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.