Lowering of the derogation standard, a plan to cull 200.000 cows and a dairy price war in Irish supermarkets are causing unrest among Irish dairy farmers.
Supermarket chains Lidl, Aldi and Tesco have been involved in a fierce price war in Ireland for three months, with the dairy shelf in particular being an important battlefield. Last week, Lidl opened the next round by lowering the price of a 2 liter carton of milk from €2,19 to €2,09. The answer came from Tesco and Aldi on Saturday. The first chain also reduced the price of a 2 liter pack of private label milk by 10 cents to €2,09 and Aldi lowered the retail prices of all private label milk products by an average of 10 cents. In April, a number of supermarket chains also reduced the price of milk by 10 cents.
With the price reductions, the supermarket chains hope to make life a little more affordable for their customers. But while Irish consumers benefit from cheaper milk, this does not apply to Irish dairy farmers. They saw the milk price fall over the past six months. While the Kerry Group paid 2022 cents per liter in December 56, this was still 37 cents per liter in mid-June.
Reason for about five hundred dairy farmers to gather in front of the Kerry Group building in Charleville on June 20 to protest against what they call a 'ridiculous milk price'. The milk price paid by Kerry was 3 cents per liter lower than paid by other processors in the region. According to the campaigners, Kerry's failure to pay the leading milk price every month is damaging the relationship between suppliers and the company and the price difference with the company paying the highest milk price should be compensated.
The farmers present blame Kerry for not fulfilling the contract agreements and are considering starting arbitration proceedings. Especially if the difference of 3 cents is not paid out to the farmers quickly. The price difference may have cost farmers around €3.000 in May, it is estimated.
No longer profitable
Chairman Tim Cullinan was also present at the protest on behalf of the Irish Farmers' Union. "We need to send an important message here and now, over the past year dairy farmers have struggled with a massive increase in costs due to inflation and now the price of milk is falling," he told the Irish Examiner.
According to him, the sector runs the risk that it is no longer profitable to become a dairy farmer. According to Cullinan, farmers have invested a lot of money in their business in recent years and want to get a return from it. According to him, some farmers have now reached the point where producing milk is more expensive than what they are paid for it. Irish farmers do not rule out further protests in the future. Kerry, in turn, has indicated that it is prepared to adhere to the contracts.
Compulsory slaughter
There is something else going on in the background for Irish farmers. For example, the Irish government is said to be considering culling 65.000 cows per year for three years to meet EU requirements for agricultural emissions. The plan, which for the time being is mainly a plan, immediately caused dissatisfaction among the Irish farmers. A total of around 7 million cows are kept in Ireland, 1,5 million of which are kept as dairy cattle. Ireland hopes to reduce that number by 65.000 cows per year over the next three years. In 2022, 1,91 million cows were slaughtered in Ireland.
Derogation
It does not end there for Irish farmers, because the European Commission has also decided to lower the derogation standard for 2024 for Ireland. When granting the derogation, the European Commission imposed a condition on Ireland that water quality must not deteriorate. A report from the Irish Environment Agency showed that the maximum derogation standard per hectare in approximately 44.000 km² of land must be reduced to 220 kilos of nitrogen per hectare to protect water quality there. It is estimated that around 6.900 Irish farmers make use of the derogation.
Research by the Teagasc, the semi-governmental organization involved in agricultural research, showed that the income of Irish farmers could decline by up to 29% through a combined measure of the lower derogation and heavier counting of cows that produce more milk.