ICMSA president Denis Drennan has accused the top executives in both Ornua and Tirlán of playing with dairy farmers livelihoods by their refusal to work together in the lucrative North American market.

The ICMSA leader warned that the practice of Irish co-op’s undercutting one another at farmers’ expense “simply has to stop”.

Drennan claimed that dairy farmers were now at risk of “falling back down the ‘value chain’ due to the inability or unwillingness of both companies to develop a joint strategy – along with other Irish co-operatives – for butter in the US market”.

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“The potential self-destruction that is developing at marketing level in the Irish dairy sector is ridiculous and it won’t be the executives concerned who suffer: it’ll be the dairy farmer,” he added.

The US spat erupted after Tirlán agreed a deal to supply its grass-fed Kirkland butter brand to American supermarket chain Costco for significantly less than the price paid by the US retailer for Ornua’s Kerrygold brand.

Producing milk sustainably needs a sustainable price

It is understood that Kirkland butter will retail at around $15/kg (€13.20/kg), while Costco sells Kerrygold for close to $21/kg (€18.50/kg).

It is feared that Tirlán’s move will pile pressure on Ornua to cut its price in order to compete, thereby hitting returns to the Irish marketing co-op and, ultimately, to ordinary dairy farmers.

“This is a perfect example of a situation where farmers are taking a hit for the failure of our milk processors to work strategically on global markets,” said Drennan.

Ornua estimates that the premium paid for Kerrygold-branded products delivers 2c/l for Irish farmers. However, Drennan asked if this 2c/l premium was now under threat because of the US dispute?

“Producing milk sustainably needs a sustainable price. The lack of co-operative thinking is undermining our ability to secure a sustainable price both in the short and long term and it is about time that the sellers of Irish dairy produce on international markets got their ‘house in order’,” the ICMSA leader said.