The Irish Farmers' Association (IFA) has called on retailers to return an extra 7c/L to fresh milk farmers this winter, arguing that the payment is needed to help offset rising input costs on farms supplying the liquid milk market.
The organisation also urged grocery retailers to stock farmer-owned dairy brands, and encouraged consumers to look for milk bearing the National Dairy Council logo when shopping.
According to the IFA, producing a year-round supply of fresh milk requires extra labour and incurs substantial additional costs. The organisation warned that fresh milk farmers are meanwhile facing higher costs while the farmgate price for milk remains low.
Processor premiums eroded
Henry Dunne, the IFA's liquid milk chair, said processors' premiums for liquid milk production have been eroded by the considerable decline in the base milk price over the past two years. "A fairer share of the existing retail price is what we are seeking," he said, indicating that the request is about how the current retail price is divided rather than an increase in what shoppers pay.
Concentrated supply chain
Seven milk processors handle the majority of Ireland's fresh milk and pay a premium above the standard manufacturing milk price, the organisation said. On the retail side, five major supermarket operators dominate the grocery market with a combined share of 94%.
The IFA estimated that around 70% of retail fresh milk sales are now private label, sold at an estimated average discount of 15% compared with farmer-owned brands, with the remainder accounted for by branded lines. Private-label milk, it said, sells at a lower price than branded milk.
Fewer producers
The organisation said persistent pressure to cut prices has squeezed margins for fresh milk producers to the point that there are now 66% fewer producers than in 1995 — 1,094 today against 3,344 three decades ago.
Requests to regulators
The IFA called on the National Milk Agency to ensure that fresh milk farmers are adequately compensated, and 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.