The Irish Creamery Milk Suppliers' Association (ICMSA) has slammed what it claims is the "potential self-destruction at marketing level" of Irish butter in the US market.

Denis Drennan, the association's president, said that dairy farmers are "becoming increasingly angry" at the potential damage to Irish butter in the US from the "nearly direct competition" between Ornua and Tirlán.

It emerged last month that Tirlán had agreed to supply grass-fed butter to the major US retailer Costco.

It is believed that the agreement will see Tirlán supply butter for Costco's private label brand Kirkland.

Ornua's Kerrygold is already well established in the US market. The competition between the two brands, and the potential impact on dairy farmer margins, has caused some criticism of Tirlán's plans.

According to Drennan, Ornua and Tirlán should be complementing each other's market presence rather than competing.

The ICMSA president claimed that this competition could see farmers "falling back down the value chain due to the inability or unwillingness of both companies to develop a joint strategy, along with other Irish co-operatives, for butter in the US market".

"It will be the dairy farmer who’s already on course for a whole year of poor milk price, that’s been below the costs of production for a very sustained period," he said.

Drennan claimed that the competition between Ornua and Tirlán is "highly likely" to cause a decrease in "the already inadequate milk price being paid to the [same] farmers who own both of the competing co-ops".

The ICMSA president also remarked that "it might be time" for Dairy Industry Ireland [DII] and ICOS [Irish Co-Operative Organisation Society] to "look inside their own doors and fix processes that are patently no longer working as originally intended".

Agriland contacted both DII and ICOS in relation to Drennan's comment. DII said it could not legally comment on a commercial matter between co-ops, while ICOS also declined to comment.

Farmers 'genuinely worried'

Drennan claimed that farmers "are taking the hit for the failure of our milk processors to work strategically on global markets".

"We think that competing against each other...simply has to stop. Instead of moving up the value chain, dairy farmers are now genuinely worried that we are going to undermine a market that is delivering for us...and they need assurances that this will not happen," the ICMSA president added.

"Producing milk sustainably needs a sustainable price. The lack of co-operative thinking is undermining our ability to secure a sustainable price both in the short and long term," he warned.