Householders get butter price boost but farmers fear supermarket 'price wars' 

President of the Irish Farmers Association Tim Cullinan said that they are “very concerned” about the developments. Picture: Finbarr O’Rourke

Householders are to get a boost at the checkout with supermarkets slashing the price of butter from today — but farmers claim they will be the losers if retailers engage in “price wars”.

After over a year of record grocery inflation, supermarkets are beginning to cut the price of key staples that have risen sharply since the outbreak of war in Ukraine.

The move to cut butter was first announced by Tesco on Wednesday, with the supermarket saying it will be pricing its 454g butter at €2.99, down from €3.39.

Tesco Ireland CEO Natasha Adams said it will be “investing in butter retail prices to help customers with their household staple costs”.

Tesco also said that all their own-brand butter is sourced from Irish farms, although they do not purchase directly from Irish dairy farmers but from processors.

With household budgets under increasing pressure we are absolutely committed to helping our customers, by keeping a laser focus on the cost of the weekly shop.

Aldi, Lidl and Supervalu soon followed suit with similar announcements.

Farmers, however, expressed their concern at the move, coming so swiftly after supermarket retailers cut their own-brand milk prices last Friday. An own-brand 2-litre carton of milk has now dropped by 10c at Lidl, Aldi, Tesco, and SuperValu.

Irish Farmers’ Association dairy chairman Stephen Arthur said there is only one loser when supermarkets engage in “price wars”,  and that is the farmer.

“We have seen supermarkets use dairy products as loss leaders in the past,” he said. 

“Our input costs remain historically high, so our farms cannot withstand such cuts. We are squeezed from both sides as we are consumers too. We need a fair margin.

It is evident that the supermarkets are cutting food prices to attract customers. This could quickly escalate into a price war where only the farmers will pay the price.

He said there is an immediate need for a food regulator to be established to ensure transparency, adding that the CSO agricultural input cost index has risen by 50% in the past two years.

Recently-published figures showed that the average price of 454g of butter across all brands rose from €3.17 in March 2022 to €3.85 in the same month this year — a 22% hike.

President of the Irish Farmers Association Tim Cullinan also said that they are 'very concerned' about the developments.

The Irish Creamery Milk Suppliers Association (ICMSA) has now called on retailers to confirm that the price reductions will be “entirely” funded from their own margins and not passed back to their supplier co-ops.

ICMSA president Pat McCormack said every farmer in Ireland is monitored at a state level but that “no-one seems to know for sure how [supermarkets] put their margins together”.

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 and 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.“