Retailers are being urged to return an additional 7c/L to fresh milk farmers this winter to help offset rising input costs, in a call from the Irish Farmers' Association (IFA) that also asks grocers to stock farmer-owned dairy brands and encourages consumers to look for milk bearing the National Dairy Council logo.
The farm organisation said producing a year-round supply of fresh milk requires "extra labour and incurs substantial additional costs". In a warning issued on Tuesday, 3 November, it said fresh milk farmers are facing higher costs while the farmgate price for milk remains low.
Premiums eroded by the fall in base prices
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.
Seven processors, five retailers
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, so liquid milk for drinking is handled on different terms from milk destined for manufacturing. On the retail side, the organisation said five major supermarket chains dominate the grocery market with a combined share of 94%.
It added that 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, it said, sells at a lower price than branded milk.
Taken together, the figures describe a chain in which a small number of processors and retailers sit between fresh milk producers and shoppers. The IFA's case is that the premium paid for liquid milk production has been eroded while costs at farm level have risen, and that a larger share of what shoppers already pay should reach producers.
Producer numbers down 66% since 1995
The association said persistent pressure to cut prices had brought margins for fresh milk producers to the point that there are now 66% fewer producers — 1,094 — than in 1995, when there were 3,344.
Calls to the regulators
The IFA has 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.
The organisation's request is framed around a fairer share of the existing retail price, rather than an increase in the price paid at the till, and covers the winter period in which it says fresh milk suppliers are absorbing higher input costs.