The Irish Farmers' Association (IFA) has called on retailers to return an additional 7 cent per litre to fresh milk farmers this winter, saying the sector is caught between rising input costs and a low farmgate price.
The organisation also urged grocery retailers to stock farmer-owned dairy brands and encouraged consumers to choose milk carrying the National Dairy Council logo. It said producing a year-round supply of fresh milk requires extra labour and incurs substantial additional costs.
Premium erosion
Henry Dunne, the IFA'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. He said the organisation 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 that premium has narrowed as the base price fell, leaving fresh milk suppliers facing higher costs while the farmgate price remains low.
Retail concentration
The IFA said five major supermarket retailers dominate the grocery market with a combined share of 94%. It estimated that about 70% of retail fresh milk sales are now private label, sold at an average discount of around 15% compared with farmer-owned brands.
Private-label milk sells at a lower price than branded milk, according to the farm body. It said persistent pressure to cut prices has squeezed margins for fresh milk producers, contributing to a 66% fall in producer numbers since 1995. The IFA said there are now 1,094 fresh milk producers, compared with 3,344 in 1995.
The organisation framed its request as a redistribution of the existing retail price rather than a call for a higher shelf price. It argued that specialist fresh milk producers need a larger share of current retail returns to remain viable in a market where private label holds most sales.
Calls for oversight
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 across the state. The IFA's intervention puts the structure of the fresh milk supply chain, and the division of retail returns among farmers, processors and supermarkets, back in focus ahead of the winter production period.