The Irish Creamery Milk Suppliers’ Association (ICMSA) has warned co-ops not to “even consider” passing retailers’ price cuts onto farmers.
Over the past week, Lidl, Tesco, SuperValu and Aldi have all announced reductions in the retail prices of milk and butter products for consumers.
The move has led to concerns among farming organisation about the potential impact on dairy farmers who are already dealing with milk price cuts over recent months, along with high input costs.
Farmers
Speaking in advance of April milk price announcements, the ICMSA Dairy Committee chair, Noel Murphy said that this year could easily turn into a “perfect storm” for dairy farmers where input costs surpassed the price of milk.
Murphy added that this could leave farmers supplying milk below the cost of production over the peak months.
He said that co-ops need to take a stand for their farmer members and resist any pressure from retailers to further cut milk price for suppliers.
“The last week has provided us all with a very stark reminder as to exactly what is wrong with the margins in our food supply-chain.
“The retail corporations have announced that they are reducing the price at which they sell milk and butter and it is now the duty of our co-ops to make sure that the retailers do not weasel out of their decision and try and pass the reduction along to us.
“We expect the co-ops to stand their ground and we will watch very carefully to make sure that they do,” he said.
“They must be told by our co-ops that the retail price reductions announced must be funded out of the retailers’ margins and that farmer milk price will not be affected. They can give away their own money, they are not giving away ours,” Murphy added.
Milk price
The ICMSA dairy chair said that milk prices have fallen by an average of 15c/L across all co-ops in the first three months of 2023, which will have “massive implications” for the incomes of farmers.
Murphy noted that fertiliser prices have started to fall in the last month, but only after the majority has been purchased at the higher price levels. Feed prices have also remained high for the past 18 months.
“The consequence of this is that 2023 will be a significantly high-cost year and the ruinous price-cost squeeze that was evident in 2009 and 2016 is starting to become a huge concern once more.
“We have to be as blunt as the situation warrants: prices returned by co-ops and milk purchasers must not reduce further in the coming months.
“There are some ‘green shoots’ in the spot markets, including the GDT, and farmers simply cannot afford further milk price reductions ahead of the peak milk supply months of April, May and June, where 40% of annual milk volumes on spring-based systems is produced.
“This is the ‘make-or-break’ period in the Irish dairy year and returns have to be maximised,” Murphy said.