Milk price rip-off allegations not true, says dairy suppliers' group

ALLEGATIONS that consumers are being ripped off on milk prices are groundless, according to the Irish Creamery Milk Suppliers Association.

President Pat O'Rourke said the claim by RTÉ was spurious and that the facts show a totally different situation.

Figures published by Forfás in its Comparative Consumer Price in the Eurozone report, clearly show that the retail price of milk is on a par with the European average.

Mr O'Rourke said that while food prices generally have increased by 25% in the last five years, the retail price for milk has increased by only 6% in the same period. However, this doesn't tell the full story.

"There is most definitely a rip-off in the liquid milk sector in Ireland with the totally unjustified margins being taken by retailers to the detriment of farmers. The larger multiple retail outlets consistently take a mark up of between 35 and 40%. This cannot be justified," he said.

Mr O'Rourke said that based on official CSO data, the current average retail price is 84c/litre. However, there is variation on the retail price.

Based on the average CSO figures, retailers take on average 22c/litre as a mark up, processors take 30c/litre and farmers are paid an annual price of 32c/litre for milk for the liquid trade.

Mr O'Rourke said he had called on Tánaiste Mary Harney and the Competition Authority to carry out a detailed examination on the totally unjustified margins being taken by the retail sector.

Dairygold chief executive Denis Lucey, responding to allegations of a milk cartel said: "If there is a cartel working it's an incredibly bad one."

Stressing that his legal advice was to "make no comment" about the milk cartel allegations in Prime Time, Mr Lucey said the cost of a half litre of water in the shops was 1. That contrasts with 53 cent for a half litre of milk, he said. "I'm very clear on that basis alone there is no cartel in operation."

Referring to the report into the sector by the Competition Authority, initiated in 1998, still unpublished, Mr Lucey said, while he has not seen it, his understanding is that the authority found nothing to back up the cartel allegation made back then.

Milk price had to be judged on the basis of value to the consumer and the profitability of the industry.

On those criteria, the consumer was doing very well and the milk industry very badly, he said.

The dairy sector was making very little money from milk while at the same time providing a highly nutritious food for human consumption.

Expanding his case, Mr Lucey said profit from liquid milk was non-existent in the past number of years and it is only lately that any profit is being made from milk, he said. "I'm very clear there is not a basis for these allegations," he said. Furthermore, in relation to the Competition Authority, Mr Lucey said "our information is that they found no basis to back claims of a cartel. "Nevertheless nobody has written to us saying the case is closed."