The Irish Farmers' Association (IFA) is urging retailers to return an extra 7c/L to fresh milk farmers this winter, saying the sector needs support to offset rising input costs. The farm organisation also wants grocers to stock farmer-owned dairy brands and is encouraging consumers to look for milk carrying the National Dairy Council logo.
The IFA said 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.
Premium erosion
Henry Dunne, the organisation'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. “A fairer share of the existing retail price is what we are seeking,” he said.
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. The organisation said five major supermarket retailers 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 sells at a lower price than branded milk, the IFA said.
The IFA's case centres on the share of the existing retail price that reaches farmers. It says the premium for liquid milk has been eroded as base prices fell, leaving producers exposed to higher costs even though fresh milk requires year-round production.
Producer numbers and regulation
The organisation said persistent pressure to cut prices had squeezed 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.
The IFA has called on the National Milk Agency to ensure fresh milk farmers are adequately compensated. It has 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 organisation's figures describe a concentrated retail grocery market and a fresh milk segment where private-label products account for a large share of sales. The IFA argues that this structure has reinforced pressure on margins for fresh milk producers and that regulators should examine how value is distributed along the retail supply chain.