The Irish Farmers' Association (IFA) has called on retailers to return an additional 7c/L to fresh milk farmers this winter, saying the payment would help offset rising input costs. The farm organisation also urged grocers to stock farmer-owned dairy brands and encouraged 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.
Processor premiums and retail concentration
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. He 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%. Those figures were presented as evidence of concentration at both ends of the chain: a small number of processors handling most fresh milk and a small number of retailers accounting for almost all grocery sales.
Private-label pressure
The IFA estimated that about 70% of retail fresh milk sales are now private label, sold at an average discount of 15% compared with farmer-owned brands. It said private-label milk sells at a lower price than branded milk.
According to the organisation, persistent pressure to cut prices has squeezed margins for fresh milk producers to the point that there are now 66% fewer producers than in 1995, with 1,094 remaining compared with 3,344 at that time.
The group called on the National Milk Agency to ensure that 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 intervention places the structure of the fresh milk chain—processor premiums, retailer concentration and the growth of private-label lines—at the centre of its case for a larger share of the existing retail price. It did not announce a new retail price, a processor payment or a retailer commitment. The proposals instead target the distribution of value within the current chain and the information available on margins.