IFA warns dairies on 'petty turf wars'
Liquid milk suppliers will not finance dairies' "petty turf wars" for supermarket contracts, the IFA has warned.
With negotiations on winter prices due to kick off this week, the farmer body insisted that milk producers would not carry the can for dairies doing sweetheart deals with the multiples.
The IFA said farmers will need in excess of 40c/l for winter milk this year. However, while processors are not quoting prices publicly, privately they have indicated that a top of 35-36c/l was more likely to be offered.
Farmer representatives claim that intense competition between dairies for supermarket contracts has undermined margins in the business.
Padraig Mulligan, the IFA's national liquid milk committee chairman, said liquid milk producers needed an annualised average price of at least 36c/l.
"With summer prices to date averaging around 28c/l, liquid milk producers will need winter prices in excess of 40c/l, depending on the number of winter months provided in each dairy's payment system," he said.
"Dairies now need to do whatever it takes, including rolling back the margins unwisely conceded to retailers, to deliver the necessary viable winter prices to their suppliers," said Mr Mulligan.
"Producers have already been advised by feed merchants that their dairy rations will be at least 20pc dearer or €40/t more and rising. Liquid-milk farms also face the 5pc hike in ESB bills this October. These two factors alone will increase winter costs by at least 1.5c/l.