Business Irish

Thursday 21 November 2019

Farmers count the cost of falling milk prices but shoppers miss out

Farmers lose out in milk price war
Farmers lose out in milk price war

Shane O'Riordan and Jane O'Faherty

Dairy farmers have seen the price they get for their milk plummet - but customers have not seen major savings passed on by supermarket chains.

The price that farmers get for their milk has reduced by a third since last year, from an average of 38.4 cent per litre to 28 cent per litre during the key summer production months.

Many farmers who invested heavily as the 31-year-old EU quotas came to an end have been feeling the pain of lower than expected milk prices.

Farm lobby groups here are planning a major campaign for milk market intervention prices. It comes after farmers in the UK forced German supermarket chain Aldi and British chain Morrisons to pay more per litre of milk.

The Irish Creamery and Milk Suppliers Association (ICMSA) called for similar increases in the UK to be brought in here.

A spokesman claimed that while milk prices for farmers had fallen by 35pc this year, there may only be "a cent in the difference" for consumers now.

Official CSO figures show that the average price for a two litre carton of full fat milk has stayed at €1.72 since January.

It has dropped only slightly from just under €1.74 this time last year.

An Irish Independent survey of milk prices found a two litre carton of own-brand milk from Aldi, Dunnes, Lidl, Supervalu and Tesco costs €1.49.

Prices for the main brand label milks, Avonmore and Premier Dairies, vary depending on the shop. A two-litre carton of Avonmore milk could cost €1.89 in a supermarket, but as much as €2.59 in a convenience store while Premier Dairies can range from €1.89-€2.75.

Spokespeople for Aldi, Lidl and Tesco confirmed their prices have not changed this year.

BWG Foods, supplier to Spar and Mace, said that it did not have exact prices for January 2015, but confirmed prices for own-brand milk had not changed since. However, Dunnes Stores and Musgrave failed to respond.

While the supermarkets are not the only link in the chain, the ICSMA said they are the most powerful.

A spokesman said: "They are so powerful that they can dictate the price backwards to the cow and then forwards. All the power is concentrated in that link in the chain."

But retailers are reluctant to spark a price war as it often "attracts negative attention" to their brand, according to Dermott Jewell of the Consumer's Association of Ireland (CAI).

"It's true, the consumer has not benefited," he said.

A spokesman for Aldi said: "We offer our three milk processors fair prices based on an annual tender process. Agreements reached are honoured."

Avonmore and Premier are owned by Glanbia. A spokesperson said farmers are given a base price for milk which is assessed once a month.

A spokesperson for Musgrave, the supplier to Centra, Supervalu and Londis said: "Musgrave is committed to working with Irish producers on the basis of long term sustainable relationships and treating them fairly."

A spokesperson for BWG Foods, supplier to Spar and Mace, said the group does not deal directly with farmers, and that the six dairies in question set the price milk suppliers receive.

Irish Independent

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