Retailers are being called on to confirm if their consumer price cuts in milk and butter will be taken out of their own margins rather than being passed back to co-ops.
Pat McCormack, the president of the Irish Creamery Milk Suppliers’ Association (ICMSA) was speaking after Tesco announced a first reduction in the price it charges for milk since 2020, confirming a cut in price of a pound of butter by 40c.
Also, SuperValu has today (Wednesday, April 3) announced that the retail price of its own brand 454g butter will reduce by 40c, from €3.39 to €2.99. This change will come into effect from tomorrow (Thursday, May 4).
Furthermore, Aldi has confirmed that it will be reducing the price of butter by 40c on a pound and 14c on a half-pound, to €2.99 and €1.85 respectively, while Lidl has confirmed that it will be reducing prices on its Dairy Manor butter effective tomorrow.
McCormack referred to this as “the obvious targeting of two key indigenous food products products produced to the highest standards by farmers now facing production costs higher than the price they will receive”.
Commenting on the announcement from Tesco, the ICMSA president said: “We are taking it to mean that today’s price reductions are to be financed entirely out of Tesco’s margins, which are easily large enough to absorb this cut in customer price”.
He added: “Farmers will now require Tesco and other corporate retailers to confirm that this is the case and that there are no circumstances where the supermarket chains will enforce this decision and reduction on their supplier co-ops and farmers.”
According to McCormack, the events of the last few days, in relation to retailers announcing or confirming price cuts, have been “out of the blue” and “rushed”.
“It is now obvious to any reasonable observer that we must move beyond the present system of opaque margins in the food supply chain where the state is unable or unwilling to work out who was getting what,” he commented.
The farm leader added: “As long as the major retailers are able to hide behind their margins or were able to dictate price backwards to their suppliers and force them to take the hit for reductions at retail level, there could be no possibility of the kind of whole sector climate transition that government policy is aimed at.
“No one is seems to know for sure how [retailers] put their margins together and the state agencies seem to operate on the basis that their job is not to ask any awkward questions about who is ultimately paying for these price reductions or special offers,” McCormack said.
He added: “The decisions taken in the last five days put a huge question mark after the idea of sustainability that we’ve been told is front and centre. Farmers, and I would submit the policymakers, now need confirmation that these price reductions are going to come out of the retailers’ very generous margins.”