Gorman: Retailer 'price war' threatens year-round milk production
The Irish Farmers' Assocation (IFA) has warned that a retailer 'price war' could finish year-round production of milk.
Although consumers might be glad to see cuts in retail milk prices, IFA President Francie Gorman said that they should be aware of the potential consequences of retail price wars.
In recent days, several retailers including Lidl, Aldi, Tesco and SuperValu confirmed a reduction in the cost of milk in their stores.
Milk
The IFA noted that Ireland’s fresh milk is provided by a small cohort of farmers who have signed a contract to produce milk 365 days of the year.
These farmers receive a modest premium over the price for manufacturing milk. This is to cover the higher production costs and commitment required of them.
The IFA president said that higher costs at farm level have already resulted in many farmers exiting fresh milk production.
Francie Gorman said the number of producers has fallen by 34% in the past 10 years and now stands at approximately 1,200 suppliers.
“The real fear here is that this will be the start of a PR campaign by retailers where they use price cuts on a small number of fresh food items to attract customers into their stores to buy other products with much higher margins,” he said.
Gorman said that the IFA will "not stand by and allow retailers to engage in a price war using food items to gather headlines".
“It is not acceptable for retailers to lead prices down, putting pressure back on farm gate prices when costs are increasing. IFA will not allow this to happen,” he said.
Price war
IFA Liquid Milk Committee chair Henry Dunne added there is a real danger that fresh milk producers will cease to sign year-round contracts.
Instead, they may choose to send their milk for manufacturing and will be free to dry off their cows over the winter.
“A price war would threaten the viability of a very vulnerable sector.
"We would ask consumers to prioritise the purchase of farmer/co-op owned milk brands.
“These kinds of price cuts might make for good headlines, but they could have long-term consequences for the viability of our fresh milk farmers,” he said.
