The Irish Farmers' Association (IFA) has urged retailers to return an additional 7 cent per litre (7c/L) to fresh milk farmers this winter to 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 carrying the National Dairy Council logo.
The IFA said producing a year-round supply of fresh milk requires extra labour and adds substantial costs. It 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 had been eroded by the considerable decline in the base milk price over the past two years. He said the IFA was seeking a fairer share of the existing retail price.
Liquid milk premium
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 the liquid milk premium is paid on top of the manufacturing price, but argued that its value has narrowed as the base price has fallen.
The IFA presented the 7c/L request as a matter of fairness within the existing retail price. It said the year-round nature of fresh milk production is central to the cost pressure, because farmers must maintain supply throughout the year.
It said five major supermarket retailers dominate the grocery market with a combined share of 94%. The organisation 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. Private-label milk sells at a lower price than branded milk, it added.
Producer numbers fall
The IFA said persistent pressure to cut prices had reduced 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 organisation linked that pressure to the retail mix, saying private-label discounting and retailer concentration had combined with low farmgate returns to squeeze fresh milk suppliers.
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.