The Irish Creamery Milk Suppliers’ Association (ICMSA) has issued a warning to co-ops against passing on retailers’ price cuts to farmers. Last week, Lidl, Tesco, SuperValu, and Aldi all announced reductions in the retail prices of milk and butter products for consumers. This move has raised concerns among farming organizations about the potential impact on dairy farmers who are already grappling with milk price cuts over recent months, along with high input costs. Speaking ahead of April milk price announcements, the ICMSA Dairy Committee chair, Noel Murphy, said that this year could easily turn into a “perfect storm” for dairy farmers where input costs surpassed the price of milk.
Murphy added that this could leave farmers supplying milk below the cost of production over the peak months. He said that co-ops need to take a stand for their farmer members and resist any pressure from retailers to further cut milk prices for suppliers. “The last week has provided us all with a very stark reminder as to exactly what is wrong with the margins in our food supply-chain,” said Murphy. “The retail corporations have announced that they are reducing the price at which they sell milk and butter, and it is now the duty of our co-ops to make sure that the retailers do not weasel out of their decision and try to pass the reduction along to us. We expect the co-ops to stand their ground, and we will watch very carefully to make sure that they do.”
Murphy emphasized that co-ops must be told by farmers that the retail price reductions announced must be funded out of the retailers’ margins and that farmer milk prices will not be affected. “They can give away their own money, they are not giving away ours,” Murphy added. The ICMSA dairy chair said that milk prices have fallen by an average of 15c/L across all co-ops in the first three months of 2023, which will have “massive implications” for the incomes of farmers.
Murphy noted that fertiliser prices have started to fall in the last month, but only after the majority has been purchased at the higher price levels. Feed prices have also remained high for the past 18 months. “The consequence of this is that 2023 will be a significantly high-cost year, and the ruinous price-cost squeeze that was evident in 2009 and 2016 is starting to become a huge concern once more,” said Murphy. “We have to be as blunt as the situation warrants: prices returned by co-ops and milk purchasers must not reduce further in the coming months. There are some ‘green shoots’ in the spot markets, including the GDT, and farmers simply cannot afford further milk price reductions ahead of the peak milk supply months of April, May, and June, where 40% of annual milk volumes on spring-based systems are produced. This is the ‘make-or-break’ period in the Irish dairy year and returns have to be maximized.”
The ICMSA’s warning comes amid growing concerns about the plight of Irish farmers, who are facing a range of challenges, including Brexit, climate change, and now, the threat of retail price cuts. The Irish government has pledged to support farmers through these difficult times, but many farmers feel that more needs to be done to ensure their survival.
The Irish dairy industry is a vital part of the country’s economy, generating billions of euros in revenue every year. However, the industry is facing significant challenges, including falling milk prices, rising input costs, and increased competition from other countries. The ICMSA’s warning is a reminder that the government and other stakeholders must do more to support Irish farmers and ensure the long-term sustainability of the dairy industry.
In conclusion, the ICMSA’s warning to co-ops not to pass on retailers’ price cuts to farmers highlights the challenges facing the Irish dairy industry. With milk prices already falling and input costs rising, farmers are facing a difficult year ahead. The government and other stakeholders must do more to support farmers and ensure the long-term sustainability of the industry.