Assurances from major supermarket groups in Ireland that all fresh milk sold in their stores is “100% Irish” have been welcomed by farm organisations who are now appealing to retailers not to further reduce the price of milk at the till.
According to the Irish Creamery Milk Suppliers Association (ICMSA) farmers are concerned that retailers could move again on consumer milk prices as they battle increased costs and a significant drop in farm gate milk prices year on year.
Pat McCormack, president of the ICMSA, told Agriland, that farmers are “hugely concerned” about the current cost associated with producing milk and that they are fast becoming casualties in a supermarket price war in Ireland.
“The price of feed, the price of fertiliser – although it has come back in recent weeks but many farmers had this the vast majority bought in at a higher prices – the cost of energy is another worry – the cost of electricity is a huge bone of contention for farmers at this point in time.
“If you were told three years ago that you were going to get 37 to 38c/l you would have considered that wasn’t too bad a year at all but inflation has absolutely driven the cost of producing milk to a different level.
“Unfortunately it is now very unrewarding for dairy farmers at the same time as we see retailers pulling the price of milk to gain footfall, they are having a war to get customers through the doors and they’re using dairy producers to entice consumers in,” McCormack warned.
Supermarket prices
According to the chair of the Irish Farmers’ Association dairy committee, Stephen Arthur, there is now a “real risk” of family farms going out of business because inflationary trends – particularly in relation to feed and fertiliser – have pushed the cost of producing milk so high.
“Supermarkets cutting the price of milk are not reflecting this – they’re using milk as a lost leader to bring in the consumers but they’re also not cutting the price of convenience food which in some instances has gone up rapidly – look at the price of a loaf of bread today compared to where it was a year ago.
“When consumers buy a litre of milk less than 10% of that may be going to a farmer and the reality is that the supermarket is claiming the biggest margin when it comes to milk price.
“The cost of production for farmers is running at between 37-39c/l. We now have some co-ops who paying farmers below the cost of the production for milk.
“We can’t fault the consumer because everyone has been hit by the inflationary price hikes, farmers understand that because they are consumers too. But what we have to ask is if you look at the supermarket shelves and see what has gone up – pasta, rice, noodles – the cut in milk price has nothing really to do with the production of milk in this country. It is simply being used by supermarkets to pull people,” Arthur said.
Both the ICMSA and the IFA have warned that if consumer milk prices were to fall by a further 10 cent in Ireland it could make some farmers, who are under “severe financial pressure” evaluate where their future lies.
“There are some farmers who are at a certain stage in their lives who may no longer want to continue milking cows because of the current pressures and uncertainty,” Arthur said.
While the ICMSA president also believes that Ireland is heading towards a period of time where there is a generation of potential farmers who may decide that “working seven days a week, 365 days a year to break even, is just not worth it”.