Speaking following the National Ploughing Championship this week, IFA National Liquid Milk Committee Chairman John Finn today said that loud claims by retailers that they care about farmers and food suppliers’ sustainability ring hollow with farmers when their produce is being ruthlessly discounted in a bid for market share.
John Finn said this is particularly true this autumn in the case of Aldi, who have in recent weeks started the first milk price war in years, aggressively devaluing their 3 litre milk offering to less than 67c/l. This is below the true cost of producing and processing milk, and the Aldi pricing signal has now been followed by Tesco and Lidl. He said, “Retailers are after market share and profits, and their price wars invariably result in farmers ultimately having to take less for their produce, or lose supply contracts.
“The National Ploughing Championships has, in recent years, become a major opportunity for some of our main retailers, including Aldi, to communicate positively with consumers and food producers.
“On its website, Aldi professes to “Love Ireland” and urges consumers to come to its stores to “help to support sustainable suppliers and farmers nationwide,” Mr Finn said.
“Delivering on this stated aim would require that, while offering value to consumers, the prices struck suffice to remunerate the upstream end of the chain. That is not what is happening in reality. Aldi and others engage in annual competitive tendering processes geared towards reducing the wholesale price of food to optimise margins while keeping retail prices low. And when it comes to liquid milk at 67c/l it is simply not “support for sustainable suppliers and farmers” – it is selling milk below its true cost,” he said.
“For farmers to take seriously their claims of commitment to the farming sector, I urge Aldi and the other retailers to live up to three basic principles:
- Commit to paying sustainable wholesale prices which remunerate the true costs of the chain;
- Stop using fresh milk as a loss leader to attract footfall and grow market share at any cost;
- Desist from discounting to unsustainable levels, thereby starting downward pricing spirals in other retailers which farmers always end up paying for.”
“I look forward to seeing Aldi behave more responsibly and showing more respect for fresh food producers and their produce, especially this autumn the fresh milk my fellow specialist producers and I milk 365 days a year to make available to them for Irish consumers,” John Finn concluded.