Liquid milk producers being forced to switch to manufactured sector

Áilín Quinlan meets West Cork dairy farmers disillusioned by the squeeze on their share of retail price.

FARMER Vivian Buttimer’s family has been farming cattle in Ballinascarthy in West Cork since the 17th century. Several generations of Buttimers have been liquid milk producers, a way of life which has been handed down from father to son.

And up to recently, Vivian (aged 46) was no exception. He has always produced fresh milk at Ballinascarthy, the village famed as the ancestral home from which the family of car genius Henry Ford emigrated to the USA.

A dairy and beef farmer who lives with his wife Jocelyn and three children, Buttimer is a member of a small but specialised group of about 1,800 farmers producing liquid milk for sale to consumers.

However, that’s a situation which may be about to change radically, thanks to the crisis currently gripping the liquid milk industry.

They make up only 10% or so of all milk production in this country.

The rest, some 16,000 farmers, produce milk for manufacture into milk powder, cheese and butter, most of which is exported.

Producing liquid milk has become increasingly unsustainable — and the farmers who produce it are becoming disillusioned, while their numbers steadily diminish.

Although the average consumer has yet to feel the effects of the dissatisfaction within the sector, more and more farmers are leaving the liquid milk sector.

Buttimer’s group of about 44 liquid milk supplies has been reduced by some 20% in the last few years, as a continuous trickle of farmers moved into the milk manufacture sector.

Another 20% are, he says, “actively indicating” plans to leave fresh milk production.

This is not just happening in West Cork. The changes at Ballinascarthy are mirrored all over the country.

It’s no surprise when you look at the milk price trend. Since 1995, says Buttimer, the retail price of a litre of milk has increased by 28%, but in the same period, the price paid to the farmer has only increased by 3%.

“We’re not getting paid enough to provide liquid milk in the winter months. Our costs have shot up in the last number of years,” complains Buttimer, who says that in the last 17 years, farmers have only got an average increase of about one cent per litre of milk. Yet, last winter alone, he said, feed costs shot up by seven cent per litre.

“In 1995, a farmer’s share of the retail price was 43%. In 2012, the farmer’s share of the retail price was 31%. Things have gotten steadily worse,” warns Buttimer, who believes wholesale prices will have to improve significantly to allow the processor farmers a price that will allow them to cover costs this winter.

“If we lose money for a second winter in a row, not alone will many farmers quit calving in the autumn for winter milk production, some may be forced to quit dairy farming, because of the staggering losses.

“This is about the power of the multiples. As farmers, we’re not negotiating the price, we’re just given a price.

“We don’t have a lot of say. We have very weak bargaining power.

“We can’t negotiate a price as a group, or it will seem as if we are anti-competitive.

“The big retailers have dropped the price of milk to attract footfall, they’re using milk as a loss leader, and we’re suffering.”

Buttimer is one of many being forced to consider abandoning the production of fresh milk: “I’d be reluctant to leave the liquid milk industry. I’ve been in it all my life.

“Up to a few years ago it was a profitable enterprise, but now the spiralling winter feed costs have put the whole sector in jeopardy. If things don’t improve, I’ll have to get out of it.”

Farmers can’t negotiate a price as a group without falling foul of competition laws, he says. Yet they’re finding themselves at great disadvantage because of the higher costs involved in calving cows in the autumn to ensure milk supply through the winter. “We calve cows in the autumn. A freshly calved cow requires premium feed or concentrate, right through the winter.

“This is very expensive,” he says, adding that this is simply not an issue for farmers who produce milk for manufacturing. They calve in the spring to coincide with the onset of grass growth.

“The cheapest form of feed is grass but we cannot feed cows on grass through the winter,” says Buttimer, who estimates winter feed cost him €5.80 per cow, compared to the €1.20 or so it costs to feed them on grass.

“Farmers who are producing fresh milk for consumption are at an economic disadvantage,” he complains.

Why have they stayed in the business this long? Tradition, mostly — and because it creates visible jobs: “We’ve been doing this in our family for three generations, and there are 150 jobs in our local town of Clonakilty processing and delivering milk.”

Rising costs

While tradition is one thing, being unable to cover costs is quite another, he warns: “We’re making a loss during the winter because of feed costs. It’s not sustainable.”

The feed statistics make for grim reading. In 2004, says Buttimer, liquid milk producers were paying €280 a ton for soya, and getting an average of around 32 cent a litre for milk. “Last winter, we were paying €530 a ton for soybean, and being paid an average of 33.75 cents per litre.

“We’re at a big loss, the cost of feed is rising. It went up 50% in the last winter.”

Yet, he points out, the price they’re getting for the fresh milk is not rising proportionately.

Farmers want something done about it — and fast.

Because if something isn’t done quickly, warns Clonakilty farmer Mervyn Helen, one of these days, consumers will find empty shelves when they go to buy their milk and cream. “We’re all being forced into the production of milk for manufacture, purely because of the economics.

“It’ll lead to a situation where there would be no liquid milk in the months of December and January.

“Milk would then become a seasonal product, which would come as a great shock to the consumer who’d wake up Christmas morning with no milk or cream.


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