The Irish Farmers' Association (IFA) has called on retailers to pass an additional 7c/L back to fresh milk farmers this winter, arguing that producing liquid milk all year round carries costs the current farmgate price does not cover.
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.
According to the IFA, a year-round supply of fresh milk requires "extra labour" and incurs "substantial additional costs". It warned that fresh milk farmers are now facing higher costs while the farmgate price for milk remains low.
Premiums eroded as base price fell
Henry Dunne, who chairs the organisation's liquid milk committee, said processors' premiums for liquid milk production have 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.
The IFA said seven milk processors handle the majority of Ireland's fresh milk and pay a premium above the standard manufacturing milk price. The organisation's contention is that this premium has been squeezed as the base price declined, leaving liquid milk suppliers with thinner returns relative to their costs.
Own-brand lines hold 70% of sales
The association pointed to concentration at both ends of the chain. Five major supermarket retailers dominate the grocery market with a combined share of 94%, it said, while an estimated 70% of retail fresh milk sales are now private label.
Those own-brand lines are sold at an estimated average discount of 15% compared with farmer-owned brands, according to the IFA, which added that private-label milk sells at a lower price than branded milk.
The appeal is aimed at three audiences at once: retailers, who are being asked to stock farmer-owned brands; processors, who pay the farmgate price and the liquid milk premium; and shoppers, who choose between own-brand and farmer-owned cartons.
Producer numbers down 66% since 1995
The IFA said persistent pressure to cut prices has narrowed margins for fresh milk producers to the point that there are now 66% fewer of them than in 1995. That leaves 1,094 producers today, against 3,344 three decades ago.
The 7c/L figure is the organisation's request rather than an agreed or implemented price change.
Calls to the National Milk Agency and Agri-Food Regulator
The IFA has called on the National Milk Agency to ensure fresh milk farmers are "adequately compensated", and on 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.