Farmers, not supermarkets, 'will pay' for cuts in food prices, warns farming body

Over the weekend, Lidl, Aldi, Tesco and Supervalu all announced a cut in the price of their own brand milk by 10c.

A supermarket price war could put farmers out of business and create a situation where retailers “won’t have Irish milk to put on their shelves”, the Irish Farming Association (IFA) has warned.

The IFA is set to meet with supermarkets over recent price reductions, which provided some relief to consumers after a period of rapid inflation.

Over the weekend, Lidl, Aldi, Tesco and Supervalu all announced a cut in the price of their own brand milk by 10c. It followed a similar pattern of cuts to the price of other supermarket staples, such as bread and butter in recent months.

Tesco said it is working closely with suppliers to pass on price cuts to customers “wherever we can” while Aldi said it is trying to shield customers from inflation as much as possible in the “challenging” economic environment.

After the surge in the cost of living in recent years, the Government had been urged to put pressure on retailers to pass on savings to customers as inflation eased considerably from its 2022 heights in recent months.

The first indications from the major retailers came via cuts to the price of milk, butter and bread in May, and last weekend marked the second milk reduction to be announced by many of the big supermarkets.

Farmers, however, have said they will lose out as they still face “huge” inflation in production costs even as supermarkets cut prices.

IFA President Tim Cullinan told RTÉ’s Morning Ireland that while the price drop will be welcome for consumers, “ultimately it’s the farmer that’ll pay” rather than the retailer.

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“We can't afford to take any more price reductions in fresh produce across all sectors,” he said.

While Taoiseach Leo Varadkar has suggested there was some evidence of profiteering by some companies amid the inflation crisis, a recent analysis from the Competition and Consumer Protection Commission (CCPC) said it had seen no indication to suggest "excessive pricing" in groceries.

It did state that changes in input prices do not appear to be immediately reflected in retail prices, and that recent falls in input costs may take time to be passed onto consumers, as has been stated by retailers.

Last week, the annual report from the National Milk Agency noted that the number of producers within the fresh milk supply chain has reduced by 35% in the last decade, with 25% of registered producers supplying half of the all-year round supplies of milk in 2021/22.