The Irish Farmers' Association (IFA) has urged retailers to return an additional 7c/L to fresh milk farmers this winter 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.
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. The request is a call on retailers rather than an announced retail price change.
Three audiences targeted
The IFA's appeal covers retailers, grocery stores and consumers. It wants retailers to return more of the existing retail price to farmers, grocers to stock farmer-owned dairy brands, and shoppers to choose milk bearing the National Dairy Council logo.
- Retailers: return an extra 7c/L to fresh milk farmers this winter.
- Grocers: stock farmer-owned dairy brands.
- Consumers: look for milk carrying the National Dairy Council logo.
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 the organisation was seeking a fairer share of the existing retail price.
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%.
Market structure and private-label share
The IFA's statement links the structure of the retail market to the returns available at farm level. It notes that the majority of fresh milk is handled by a small group of processors, while grocery sales are concentrated among five major retailers. Within that chain, it says, private-label milk accounts for a large share of retail fresh milk sales and is sold at a discount to farmer-owned brands.
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 squeezed margins for fresh milk producers to the point that there are now 66% fewer producers than in 1995. It said the number has fallen to 1,094 from 3,344.
Regulatory requests
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.