The Irish Farmers' Association (IFA) has called on retailers to return an additional 7c/L to fresh milk farmers this winter to help offset rising input costs. The farm organisation also urged grocers 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 on Tuesday that fresh milk farmers face higher costs while the farmgate price for milk remains low. It said the 7c/L request is intended to help address that gap and secure a fairer share of the existing retail price.
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. He said a fairer share of the existing retail price was what the organisation was seeking.
Processor and retail structure
The IFA said seven milk processors handle the majority of Ireland's fresh milk and pay a premium above the standard manufacturing milk price. It also 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.
Those figures form the backdrop to the IFA's request. The organisation argues that the combination of low farmgate prices, higher production costs and a retail market weighted toward private label has left fresh milk producers under financial pressure. The IFA points to these market shares and sales figures when making its case for a larger return to farmers.
Producer numbers
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 said the number stands at 1,094, compared with 3,344 in 1995.
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. Its remit covers the liquid milk supply, while the IFA's separate call to the Agri-Food Regulator focuses on transparency across producer, processor and retailer margins.