Milk producers intensify campaign for fairer margins from retailers

Liquid milk producers are intensifying their campaign to extract a fairer margin from retailers, according to IFA national liquid milk chairman Teddy Cashman.

The IFA claims producers are simply not being paid enough to deal with substantial inflation in the cost of feed.

The IFA also insists producers’ remuneration is out of kilter with retail market trends, which have seen more and more milk sold at lower margins under retailers’ own private labels.

During his series of recent meetings with the main Irish-based retailers, Mr Cashman urged them to enter into immediate talks with dairies to redistribute margins, and secure a sustainable farm-gate price level covering production costs and remunerating own labour for the longer term.

Mr Cashman said: “It costs farmers as much to produce a litre of branded milk as a litre of private label milk. At the Teagasc liquid milk conference last week, we heard ... that the cost of feeding cows on specialist liquid milk farms in 2012 had increased by a massive 65%, or just over 4c per litre of milk produced.

“This is due to the combination of weather impact on the quantity and quality of grazed and ensiled grass, a 50% increase in compound feed prices since 2010, and the need to feed significantly more of the latter to make up for the former.”

He said these cost hikes would lead to most liquid milk producers making serious losses, unless dairiessubstantially increase the winter premiums they will pay farmers over the coming months, to lift the annual average price to the 40c/l needed to cover costs and pay the farmer’s own labour.

“If this does not happen, farmers will produce at a loss, not to mind pay themselves a wage. I believe dairies and retailers have a responsibility to ensure that the liquid milk retail chain remains sustainable, in the best interest of consumers, who clearly value the availability of good value, high quality, locally produced fresh milk. This means dairies and retailers need to renegotiate urgently their respective margins, to ensure that pricing all along the retail chain covers costs and farmers’ labour, and supports continued local supplies.”

Farm groups including the IFA and ICMSA have been pressurising the creameries to increase the price per litre being offered to suppliers. With profits nullified by months of weather-induced fodder shortage, price cuts, feed cost increases, and superlevy fines, the farmer representative groups are calling upon the co-ops to ease some of the pressure by increasing the price paid to their milk suppliers.

Munster dairy farmers are also citing the resignation of Kerry Co-op chairwoman Anne Marie Keane as further evidence of the mounting discord between milk suppliers and the co-ops. Dairy farmers believe that Ms Keane resigned due to Kerry’s failure to deliver on commitments made last year to deliver the market-leading price per litre to suppliers.

Kerry has said Ms Keane resigned for personal reasons. She had served on advisory committees for 10 years, and became a director in 2009.