'Inadequate' compensation hitting liquid milk supplier confidence
Greater compensation for farmers is needed to halt declining numbers of liquid milk suppliers, the Irish Farmers' Association (IFA) said.
The comments come as data from the National Milk Agency (NMA) shows that the number of registered milk supply contracts in 2024/2025 stood at 1,094, a decrease of 102 contracts on the previous year.
The report shows that since the agency was established in 1995 the number of liquid milk producers has now reduced by 67%.
Henry Dunne, chair of the IFA Liquid Milk Committee, told Agriland that the declining numbers are "not surprising".
"When you're seeing figures of further reductions, it certainly links to the fact that the compensation that's out there is just inadequate to give confidence within farmers to continue what they're at.
"The dedication and commitment that is put in by farmers. The trust has been eroded when the compensation just is not covering the costs of production in challenging conditions," he said.
Liquid milk
Dunne pointed to the high production costs and tight margins faced by liquid milk suppliers, particularly during last winter.
"Volatility has become one of those buzzwords within dairy itself, but volatility within liquid [milk] it is just as relevant if not front and centre.
"A great example of that is the issues that we've had more recently with the fuel crisis, but also the massive increase in [milk] production globally that took hold at the back half of the year when we went into a high cost period.
"We saw base price fall away, contracts and premiums weren't really able to match the costs of production at that time," he said.
"Farmers see this at a processor level and feel that there's an understanding there, but I think there's also the know-how that if you don't look after the primary producer at the very bottom, it does erode as starkly as it has within liquid milk with a 67% decline in the last 31 years," Dunne added.
Compensation
The IFA Liquid Milk Committee chair also pointed to recent decisions by retailers to cut the price of milk and butter as a cause for concern.
"Retailers need to be conscious and informed as to the challenges that are out there on farm.
"When you have the global market, the supply and demand, the curve is pointing in the wrong direction for dairy farmers at the moment.
"When you have huge increases in supplies globally, that adds its own challenges within it.
"But there is opportunity for processors to compensate and to allow measures with the aid of retailers.
"I think there's a margin there between retailers and processors that could help farmers when things are tight," he said.
Similar to other farming enterprises, generational renewal is a challenge for the liquid milk sector.
"There's certainly, on average, an older demographic compared to the traditional spring-based system. But I think there's great opportunity out there for younger and newer generations that do get into it.
"There's a lot of systems out there on farms that are designed and set up for this, based on stocking platforms and infrastructure that allow for this system to work.
"Support needs to be out there to keep these guys going," Dunne said.
Information
Dunne said the increasing challenges facing liquid milk suppliers on the ground has to be conveyed to the Department of Agriculture, Food and the Marine (DAFM), the Agri-Food Regulator, processors and retailers.
The IFA is hoping to meet with the department to discuss the issues facing the sector soon.
"If everyone can be informed to an adequate level, then decisions could be made more relevant to the needs of the farmer," he said.
Dunne also believes there may be scope to give the National Milk Agency additional power to "put a little bit of pressure on processors" on the winter milk margin.
