The liquid milk market in Ireland had become so cut-throat that it is now failing to remunerate the costs of the specialist year-round milk producers without whom fresh quality milk could not be guaranteed year-round on supermarket shelves.
This is according to the Irish Farmers Association (IFA) National Liquid Milk Committee Chairman Teddy Cashman.
Speaking to AgriLand this afternoon, he said dairies need to stand firm against retailers to secure the necessary producer prices and premiums for next winter, regardless of market developments.
“After the nightmare of skyrocketing feed costs and the fodder crisis last winter and spring, the fact that manufacturing milk prices have risen strongly in the last few months is the only thing that is keeping liquid milk producers’ heads above water. It is not good enough: manufacturing milk prices are volatile, and when they eventually weaken in response to global dairy markets, liquid milk producers will be left high and dry,” he said.
“A lot of producers are getting out of specialist liquid milk production because spring milk costs are lower and margins better in good years. In the past 10 years alone, we have lost 32 per cent of liquid milk producers, according to the National Milk Agency,” he said.
“Retailers must be made to understand and accept that to be certain of year-round locally produced quality fresh milk on their shelves, farmers need to be guaranteed an adequate share of market returns, which cannot be squeezed at will. Dairies must stand tough on the wholesale price increases it is reported they have received from retailers, and deliver strong winter premiums and prices reflecting the massive cost increases incurred in the past 12 months,” he added.
The 2012 annual report of the National Milk Agency, just published, shows that since 1995, the farmer’s share of the retail price has fallen from 43 per cent to 32 per cent.
“In recent years, retailers have indulged in turf and price wars in response to the Recession. They have used milk to drive consumer footfall and fight for market share, indulging in uneconomic promotions which they have expected farmers and processors to pay for,” the Dairy chairman said.
“Our dairies must negotiate hard with retailers, and secure our winter prices and premiums for this year, and a long-term sustainable approach that remunerates fairly the costs of specialist liquid milk production. The consumer clearly values locally produced quality milk, and expects to find it on supermarket shelves. Retailers owe it to consumers to secure those supplies,” he concluded.
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