The Irish Farmers' Association (IFA) is urging retailers to return an additional 7c/L to fresh milk farmers this winter, saying the payment would help offset rising input costs in the liquid milk sector.
The farm organisation also called on grocers to stock farmer-owned dairy brands and encouraged consumers to look for milk bearing the National Dairy Council logo. It said producing a year-round supply of fresh milk requires "extra labour and incurs substantial additional costs".
The IFA warned that fresh milk farmers are facing higher costs at a time when the farmgate price for milk remains low.
Processor premiums 'eroded'
Henry Dunne, chair of the organisation's liquid milk committee, 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.
Concentration in retail
The organisation said five major supermarket retailers dominate the grocery market with a combined share of 94%. It estimated that 70% of retail fresh milk sales are now private label, sold at an average discount of about 15% compared with farmer-owned brands, and that private-label milk sells at a lower price than branded milk.
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 — 1,094 — than in 1995, when the count stood at 3,344.
Taken together, the IFA's figures describe a chain in which a small number of processors and five dominant retailers sit between a shrinking group of specialist liquid milk producers and the household consumer. The organisation's case rests on the extra labour and additional costs it says a year-round fresh milk supply involves, and on the gap it identifies between the retail price and what farmers receive.
Requests to state bodies
The IFA has asked the National Milk Agency to ensure fresh milk farmers are "adequately compensated" and 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 measures set out by the IFA are requests to retailers, regulators and consumers; the organisation did not say that any had been agreed.