The Irish Farmers' Association (IFA) has called on retailers to return an additional 7c/L to fresh milk farmers this winter, arguing that producers need a fairer share of the retail price to offset rising input costs.
The farm organisation also urged grocery retailers 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 association warned on Tuesday that fresh milk farmers are facing higher costs while the farmgate price for milk remains low.
The IFA framed the request around the winter months, when maintaining a year-round supply of fresh milk places additional demands on producers.
Processor premiums eroded
Henry Dunne, chair of the IFA's liquid milk committee, said processors' premiums for liquid milk production have been eroded by the considerable decline in the base milk price over the past two years, and that the organisation is seeking a fairer share of the existing retail price.
Seven milk processors handle the majority of Ireland's fresh milk and pay a premium above the standard manufacturing milk price, according to the IFA. The organisation said five major supermarket retailers dominate the grocery market with a combined share of 94%.
It estimated that around 70% of retail fresh milk sales are now private label, sold at an average discount of about 15% compared with farmer-owned brands, and added that private-label milk sells at a lower price than branded milk.
Producer numbers down sharply
The IFA said persistent pressure to cut prices has squeezed margins for fresh milk producers to the point where there are now 66% fewer producers — 1,094 — than in 1995, when the sector counted 3,344.
Alongside its appeal to retailers, the IFA has asked the National Milk Agency to ensure that fresh milk farmers are adequately compensated, and has called on the Agri-Food Regulator to bring transparency to producer, processor and retailer margins.
The two requests point to a supply chain that the IFA views as highly concentrated at both ends, with a small number of processors handling liquid milk and five retailers accounting for almost all grocery sales.
Regulatory backdrop
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.