Two Irish co-operatives appear to be following different – and potentially conflicting – strategies in international markets that could undermine farmer milk price, Irish Creamery Milk Suppliers’ Association (ICMSA) president Denis Drennan has said.
The Irish Farmers Journal understands that Tirlán agreed a substantial deal to supply American supermarket chain Costco with grass-fed butter for the retailer’s own-brand, Kirkland, which retails about $6/kg cheaper than Ornua's Kerrygold.
Drennan highlighted the potential competition between Irish butter products in the US market and the danger it may present for farmers’ margins.
The ICMSA president said that these two co-ops were very quick to preach sustainability to their suppliers and the need for higher standards.
However, these standards were not deliverable if milk price was at unsustainable levels.
“There is an onus on the two companies involved to clearly demonstrate how they are in sync in international markets and not undermining each other’s ability to deliver best price to their suppliers,” he said.
Drennan believed the two organisations could agree a strategy for international markets that would deliver an increased milk price for farmers and not a reduced margin due to people protecting their own ‘patch’.
Maximum return to dairy farmers
All Irish dairy farmers were proud of the reputation and value of Kerrygold, he said, and wanted to see the sector working together to deliver maximum return to the very hard-pressed dairy farmers.
Drennan added that it remained to be seen whether the divergent strategies were going to damage Irish dairy farmer returns in international markets.
“ICMSA is very concerned that it will, and we are very clearly saying that it is up to the executives and boards of the two co-ops to answer that question with the detail and foresight required and agree a strategy that is in the best interests for the Irish dairy sector.
“Liquid milk suppliers saw their margins whittled away due to processors competing at unsustainable levels and selling milk below cost – that can’t happen here.
“The price paid to farmers for milk simply must reflect the cost of producing it and right now – when that is categorically not the case – farmers will be astonished and irritated to see energy and time being taken up by other matters.”
The IFA is seeking an urgent meeting with Tirlán on the matter.
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