The Irish Farmers' Association (IFA) has urged retailers to return an additional 7c/L to fresh milk farmers this winter, saying the move would help offset rising input costs. The farm organisation also called on grocers to stock farmer-owned dairy brands and encouraged consumers to choose 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. It warned that fresh milk farmers are facing higher costs while the farmgate price for milk remains low.
Henry Dunne, the IFA'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 organisation was seeking a fairer share of the existing retail price.
Processor premiums and retail concentration
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 added that five major supermarket retailers dominate the grocery market, with a combined share of 94%.
According to the organisation, an estimated 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 said.
The IFA said persistent pressure to cut prices had reduced margins for fresh milk producers. It said there are now 66% fewer producers, at 1,094, than in 1995, when there were 3,344.
The combination of a concentrated retail market and a high share of private-label sales is central to the IFA's argument. With five retailers accounting for 94% of the grocery market, the organisation contends that retail price pressure can quickly feed back to producers. It says private-label milk's estimated 15% discount to farmer-owned brands reinforces that pressure.
The IFA's request is framed around the existing retail price. It says it is seeking a fairer share of that price rather than setting out a new retail pricing mechanism. The organisation argues that the additional costs of year-round fresh milk production are not being reflected in returns to farmers.
Calls to regulators
The IFA has called on the National Milk Agency to ensure 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.