‘Retail undercutting of fresh milk is an unfair trading practice’

Suppliers of fresh milk to the Irish retail trade “appear to have resumed aggressive undercutting practices to secure a slightly bigger share of a static market”.

That’s according to Tim Cullinan, president of the Irish Farmers’ Association (IFA), who said that he was “shocked to learn” that this was occurring.

He called on the government to address the issue as a matter of urgency, arguing that the Covid-19 pandemic “should have thought us all the importance of keeping the food chain economically sustainable”.

There is competition…and then there are unfair, unsustainable practices, where retailers pressure suppliers to offer ever-lower prices.

The dairies that sell our milk need to wise up and resist those pressures. We know their inevitable results: The devaluation of a high-quality, nutritious product and lower milk prices for farmers,” the IFA president claimed.

He continued: “The new Programme for Government has promised us a national food ombudsman to enforce the Unfair Trading Practices Directive [from the EU]. This latest example of unsustainable pricing pressures shows the urgency of the need for such proactive enforcement.

I call on the Taoiseach [Micheál Martin] to make it clear to all retailers and the food industry that he will fast track the introduction of the ombudsman.

“Meanwhile, dairies need to cop on and resist retailer pressures, and retailers cannot have it both ways: Proclaiming to seduce consumers with their commitment to sustainability, both environmental and social, and riding roughshod over the economic sustainability of farmers,” Cullinan concluded.

Ornua PPI

Cullinan and the IFA have also raised concerns over reports that Ornua is reviewing aspects of the Purchase Price Index (PPI).

Speaking after a meeting last week of the association’s National Dairy Management Committee, IFA president Tim Cullinan said that he was looking for a “top level meeting” with Ornua to discuss the issue.

“Farmers and the IFA have always valued the transparency the PPI has brought to the dairy market. The same transparency must apply to any proposed change in any aspect of the PPI.

Any review must also be used to show the full benefits Ornua returns to co-ops.

The issue centres around the ‘assumed processing cost’ of milk used by Ornua – currently fixed at 6.5c/L – that is taken into account when determining the PPI.

It is understood that processors feel the current assumed processing cost does not adequately reflect the costs of processing and the investment in stainless steel in recent years.