The Irish Farmers' Association (IFA) has called on retailers to pass an additional 7c per litre back to fresh milk farmers this winter, arguing that year-round liquid milk production carries costs that are not being reflected in the farmgate price.
The farm organisation also urged grocers to stock dairy brands owned by farmers and encouraged consumers to look for milk carrying the National Dairy Council logo. It said fresh milk requires extra labour and substantial additional costs because supply must be maintained throughout the year.
IFA liquid milk chair Henry Dunne 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. The IFA warned on Tuesday, November 3, that fresh milk farmers were facing higher costs at a time when the farmgate price for milk remained low.
Retail concentration and private label
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. Five major supermarket retailers dominate the grocery market with a combined share of 94%, the organisation said.
The IFA estimated that about 70% of retail fresh milk sales are now private label, sold at an average discount of 15% compared with farmer-owned brands. Private-label milk sells at a lower price than branded milk, it added.
The organisation said persistent pressure to cut prices had squeezed 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 IFA said the additional 7c/L is intended to help offset rising input costs. Its case is directed at the share of the existing retail price available to fresh milk farmers, rather than at a proposal to raise the price paid by shoppers.
The organisation linked the pressure on margins to the shrinking supply base, citing the fall in producer numbers as evidence that price pressure is affecting fresh milk production capacity.
Calls to regulators
The IFA called on the National Milk Agency to ensure that fresh milk farmers are adequately compensated. It also asked 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 intervention places the retail price of fresh milk and the division of margins between farmers, processors and retailers at the centre of the winter supply debate. Its requests focus on the share of the existing retail price rather than on a new consumer price, and on greater visibility of how margins are distributed along the chain.