The Irish Farmers' Association (IFA) has called on retailers to return an additional 7c/L to fresh milk farmers this winter. The farm organisation said the request is intended to help offset rising input costs and argued that 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 while the farmgate price for milk remains low. Its case is that the extra labour and costs involved in year-round liquid milk production are not being matched by an adequate return from the market.
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. Dunne said the IFA was seeking a fairer share of the existing retail price.
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%.
The IFA 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, it said.
The organisation said persistent pressure to cut prices had squeezed margins for fresh milk producers. It said there are now 66% fewer producers, at 1,094, than in 1995, when there were 3,344.
Alongside the call for the extra 7c/L return, the IFA urged grocers to stock farmer-owned dairy brands. It also encouraged consumers to look for milk bearing the National Dairy Council logo.
The farm organisation called on the National Milk Agency to ensure fresh milk farmers are adequately compensated. It 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 IFA's demands therefore span the supply chain: a higher return from retailers, support for farmer-owned brands at retail, consumer recognition of the National Dairy Council logo, compensation through the National Milk Agency and greater margin transparency through the Agri-Food Regulator.
The statement did not specify how the additional return would be implemented, nor did it name individual retailers or processors.