The Irish Farmers' Association (IFA) has urged retailers to return an additional 7c/L to fresh milk farmers this winter, arguing that the sector needs a fairer share of the existing retail price 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. It said a year-round supply of fresh milk requires extra labour and incurs substantial additional costs.
The IFA 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 a 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.
The IFA's case rests on the difference between milk supplied for liquid consumption and milk used for manufacturing. It said processors pay a premium for liquid milk above the standard manufacturing price, but that this premium has narrowed as the base price fell. The organisation is seeking a larger share of the current retail price rather than setting out a new retail pricing mechanism; it wants retailers to allocate more of the shelf price to the farmgate and regulators to examine how margins are distributed.
Processor and retail concentration
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. It said five major supermarket retailers dominate the grocery market, with a combined share of 94%.
The organisation estimated that about 70% of retail fresh milk sales are now private label, sold at an average discount of about 15% compared with farmer-owned brands. Private-label milk sells at a lower price than branded milk, it added.
The IFA said persistent pressure to cut prices has 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's request focuses on the share of the existing retail price rather than proposing a consumer price increase. It did not say that retailers had agreed to the 7c/L return. The organisation framed the issue as one of distribution along the fresh milk chain, from retailers and processors back to the farmers who produce a year-round supply.