Could a 'white flu' be on the cards for liquid milk producers?

Liquid milk producers were given their chance to have a say on the current state of the industry at a recent IFA Liquid Milk Rally in Portlaoise.

Over 300 farmers attended the meeting to discuss the problems affecting the sector, which has seen producer numbers fall by more than 40% over the past 11 years.

Farmers were visibly angry and many questioned the viability of the enterprise in both the short and long term, with the issue of contracts, both retail and producer, coming to the fore at the meeting.

Speaking from the crowd, one farmer said that liquid milk producers should consider taking a leaf out of An Garda Siochana’s book by stopping milk collections over a number of days by implementing a ‘white flu’.

Another farmer suggested that the only way to hit processors and retailers was by stopping the flow of milk and making a ‘couple of days milk supply disappear’.

The farmer also added that such a move would work well in the lead up to Christmas.

Contracts feature heavily

Contracts, both at retailer and farmer level, featured heavily at the meeting.

Irish liquid milk producers currently supply the market with 5% more milk than it requires, and to combat this issue one farmer urged those in attendance to produce more milk than their contract states.

A number of farmers aired the views on the current length of the contracts available, with one farmer stating that longer-term contracts are needed to allow farmers making decisions on a year-to-year basis.

Also speaking at the meeting was IFA’s Catherine Lascurettes, who said that the length of contracts between retailers and processors needs to be examined.

The Executive Secretary of the IFA Dairy Committee said that the current 12 month tenders pit dairies against each other, essentially causing a race to the bottom, which has serious consequences for farmers.

There is incredibly good value for consumers but the farmers are the main losers. The annual supply tenders create massive instability in the market.

Liquid milk farmers frustrated

Taking the podium at the meeting, IFA National Liquid Milk Chairman John Finn said liquid milk suppliers are frustrated.

Finn said that farmers struggle from year-to-year to secure winter milk payments to cover costs.

“We haven’t been able to do this in the last three years at least, and especially last winter.

Dairies must engage for 2016/17, and beyond, and ensure farmers are paid a price that justifies their continuation in the specialist liquid milk production system.

The IFA representative also said that liquid milk producers are beginning to vote with their feet, as the number of suppliers has dropped from over 4,000 to 1,900 farmers since 1995.

“We need to develop a real strategy for the fresh milk market: winter supplies are threatened by farmers reducing autumn calving, and transitioning out of liquid milk, encouraged this year by the EU production reduction scheme.

“There is also the real possibility that in two years’ time, Brexit related import tariffs will put in question the 25% of the fresh milk we import from Northern Ireland,” he said.

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To ensure there is a future for liquid milk producers, Finn said the IFA will sit down with Minister Creed to have him preside over an assembly of stakeholders to force all parties to face up to the threats on the sector.

What the IFA wants for liquid milk producers:

An end to one-year retail tenders which promote a downward wholesale and farmer price spiral.
A complete review of farmers’ contractual arrangements, including pricing systems, to include multi annual commitments giving farmers security.
Contracts to ensure that farmers secure a fair share of stable return from the market, which can vary to offset volatile base milk prices.
A through study of the cohort of 1,900 farmers currently involved in liquid milk to establish their age profile, succession plans and intentions in regards to production.
Stronger retail regulation, with a return to the prohibition on below-cost selling, and the introduction of an independent, well-resourced Ombudsman to oversee fair trading relations in the food chain.