Future uncertain for year-round domestic liquid milk market supply

The future of an all-year-round supply for the domestic liquid milk market is now at a tipping point, according to the National Milk Agency, whose annual report for 2012 was published yesterday.

Denis Murphy, chairman, said the confidence of registered producers in the all-year-round supply model for liquid milk for the domestic market has been shattered by the costs incurred in winter milk production in 2012/13 and by the absence of any market response to these costs at that time.

“In the absence of adequate price incentives and encouragement for winter milk production for the future, many liquid milk producers are likely to switch their business models from all-year-round supplies for the domestic fresh milk market to seasonal milk supplies for export,” he said.

Last year, over 8% of domestic milk supplies of 5,225m litres were processed for liquid consumption on the home market.

The liquid milk market is the largest consumer market for milk and milk products in the State with an estimated retail value of €524m in 2012.

National consumption of fresh liquid milk last year was 563m litres, a decrease of 15m litres or 3% on consumption in 2011.

The annual report also revealed that per capita consumption in the State of 0.34 litres per day was the second highest in the EU.

Market share of domestic supplies in the liquid milk market remained unchanged at 74% of sales.

Combined market share of imports of packaged milk of 86m litres and of 59m litres of milk, which were imported for processing for liquid consumption in the State, was also unchanged at 26%.

Retailers distributed 79% of all fresh milk. The three largest multiple groupings had an 80% share of the Irish grocery market in 2012. Over 50% of retail milk sales are now sold under retailers’ “own label” brands.

The report noted that fresh milk continues to be an excellent value for money product. While general consumer prices increased by 2% compared with the previous year, the national average retail price for fresh milk is estimated to have fallen by 3% compared with 2011.

A total of 1,936 registered producers had milk supply contracts registered with the agency for supplies of 435m litres of milk to 15 registered processors.

Last year, the average producer milk price, excluding Vat, for manufacturing milk supplies fell by 3c/litre to 31c/litre while the annual average producer price for milk for processing for liquid consumption fell by 1.4c/litre to 34c/litre.

The price differential for all-year-round milk supplies over the annual average manufacturing price rose to 3c/litre.