Launching the IFA Milk Wise 2025 strategy today, IFA President Joe Healy warned milk produced over the winter months will soon fail to meet demand. There is a real risk of shortages for consumers because farmers aren’t being paid enough to milk cows during the winter.
90% of Ireland’s dairy farmers produce milk on a seasonal basis for commodities, mainly for export. Fresh milk for the supermarket shelf is produced 365 days a year by 1,800 specialists among our 18,000 dairy farmers. Traditionally, there has been a price premium for farmers who milk all year round, but their margin has been eroded in recent years.
The IFA President said the pressures on supplies could be exacerbated by the Brexit process so we need a strong strategy to keep local milk that is valued by Irish consumers on supermarket shelves.
Joe Healy said, “Article 50 will be triggered tomorrow, which will start the formal process of Britain leaving the EU. 26% of milk on supermarket shelves comes from Northern Ireland. The IFA strategy identifies the challenges and provides solutions which can secure locally-produced, high-quality fresh milk year round, while nurturing this valuable €530m market”.
Joe Healy said: “With our strong export growth no longer hampered by milk quotas, the amount of supermarket milk produced over the winter has dropped – cover over consumption in the winter months has fallen from 11% in 2013 to 5% in 2014”.
IFA National Liquid Milk Chairman John Finn added: “When I started in liquid milk production in 1984, it was a profitable farming enterprise, with brands dominating the market and the largest volumes sold door to door. Things have changed. Supermarket private labels sourced through price-based tenders now dominate sales. The cut-throat competition for market share between dairies and retailers has eroded margins to unsustainable levels”.
John Finn said from a retail regulation point of view, it is time to put an end to the one-year tenders favoured by our main retailers. These make for dysfunctional commercial relations and result in wild swings in supply arrangements, which neither farmers nor dairies can cope with. I am challenging dairies and retailers to show greater creative, and provide multi-annual fixed price contracts similar to those offered by co-ops for creamery milk destined for export.”
“We also believe that our retail regulations need to be revised to return to the prohibition of below cost selling, and to provide for a well-resourced and independent Ombudsman to stamp out unfair trading practices and secure a sustainable margin for primary producers,” he added.
“We propose to first establish a base line through a profiling survey of the 1,800 specialist producers, their ages, their succession plans and their intentions. Autumn dairy calf births fell 15% in 2015 and 11% in 2016. It is clear that we have reached the point where shortages of fresh milk will occur in winter. The National Milk Agency has already agreed with our proposal, and the survey is to be carried out this year. We also believe farmers’ contracts need to be reviewed to offer greater fairness and transparency in pricing, multi annual commitments, and better visibility on winter prices before signature,” he said.
“We have made a number of recommendations regarding the specific regulation of liquid milk by the National Milk Agency. Most of these are already being progressed in co-operation with the NMA,” Mr Finn added.
“We believe it must be empowered to collect and disseminate data on milk imports, and must together with Teagasc, develop and maintain an Observatory of input costs. This must be a tool in fulfilling the NMA’s mission under the Milk Supply Act 1994 to secure adequate compensation for farmers over the winter months”
“Current guidelines used for this assessment consider that, while the milk is supplied, adequate compensation is duly paid. This does not allow anticipating the type of looming shortages we are seeing at the moment. The assessment of ‘adequate compensation’ must be made on the basis of robust economic analysis of the profitability of liquid milk production,” he said.
Mr Finn added that President Joe Healy and he would present this strategy to Minister for Agriculture Michael Creed later this week. Challenging dairy, retailers, other industry stakeholders and Government, Mr Finn urged all to support its Milk Wise 2025 Strategy.