BY DIONNE MEEHAN
THE latest announcement of a cut in the retail price of milk has left dairy farmers around Donegal actively considering leaving the fresh milk business.
With a study showing the average person consuming just over 100 litres of fresh milk in 2021, the equivalent of just two litres a week per person, the drop in the retail milk price for a family of four equates to a reduction in spend of 40 cent, a drop that is massive for the dairy sector.
With much of the public purchasing private label milk (the supermarket’s own brand) at a discounted price, this has resulted in 657 fresh milk suppliers exiting the business in the past ten years.
To ensure a domestic supply of fresh milk on the grocery shelves all year-round, dairy farmers work tirelessly with the aim of calving late September/early October to ensure the cow is in peak production when indoors.
Although these farmers are producing milk at a more expensive time of the year, it is necessary so the public have milk on the shelves.
With less than eight per cent of dairy farmers milking a dedicated herd of cows in the autumn, Gareth Porter, a dairy farmer from Castlefinn said the extra work and management needs to be financially rewarded.
“The competition for market share across the five main supermarkets (Tesco, Dunnes Stores, Supervalu, Aldi and Lidl) to offer low prices has exerted massive downward pressure on the wholesale price paid to farmers who milk year-round.
“Yet, it is critical that farmers supply these chains given how much of the market they dictate.
“This recent price reduction is unlikely to be borne out by the retailers and instead they will seek reductions in the wholesale price,” he said.
However, unlike the price of milk, production costs for the farmer have not fallen.
Gareth said the latest CSO data shows that input prices on farms have fallen by 0.9 per cent in February 2023, but farm output prices have fallen by much more at 3.9 per cent.
“While farmers have previously overcome such price challenges by increasing scale and on farm efficiency, the current situation we find ourselves in is economically unsustainable.
“Farmers cannot keep pace with rising costs and are now actively considering exiting the fresh milk business.
“In the past year, 20 per cent of farmers that supply milk year-round have exited and it is anticipated that many more will exit as they face rising feed costs and poor returns,” he said.
Although consumers can celebrate a reduction in food prices, Gareth said the collateral damage caused by the continuous erosion of food prices will be borne out in near term.
“We have seen it already in other sectors.
“Pig numbers are down by 10 per cent, eggs are in very short supply and we have lost field vegetable growers.
“Consumers need to be more conscious of the impact their purchasing decisions have on our farming systems,” he said.
“In an era where agriculture is trying to deliver more for environmental sustainability, consumers can help by prioritising the purchase of farmer owned brands.”
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