Dairy farmers have warned that they will not allow the current supermarket price war to continue indefinitely, and have threatened to mount some form of protest to stop the price cuts.
At an IFA national dairy conference in Portlaoise yesterday, some farmers threatened to take action similar to the recent blockade at the meat factories. They were responding to a statement by Mr Maurice Pratt, managing director of Tesco Ireland, that the supermarket chain intended to maintain lower prices for the long term.
Aldi, Lidl, SuperValu and Dunnes Stores are also involved in the price war, which started over a week ago.
Yesterday Tesco was selling two litres of milk for 86p, which is less than £2 per gallon. Farmers are being paid an average of £1 per gallon for milk at the moment.
"If this continues, we will make the beef strike look like Wanderly Wagon," one farmer warned during the question-and-answer session which followed Mr Pratt's address. Other farmers accused the supermarkets in the price war of using strong-arm tactics which would eventually force farmers out of business.
"We are not paying the price," said Mr Donal Kelleher, chairman of the IFA's liquid milk division.
"Liquid-milk producers refuse to become the victims of these cynical marketing ploys, either by having their locally produced milk displaced by imports, or by having their price cut to the bone by processors under pressure."
Asked what action the IFA would take to stop the price war, Mr Padraig Walshe, IFA dairy chairman, said the organisation would be listening to its members and consulting them before deciding on any action.
The IFA president, Mr Tom Parlon, who led the beef factory blockade, said no one was duped by the real motivations of the multinational chains. "Processors' margins are squeezed dry and, if this is allowed go unchecked, jobs and the livelihoods of farmers are the ultimate victims of this race for profit and market share," he said.
Mr Pratt told the conference that the cutting of prices of 50 own-brand products was not a short-term competitive promotion. "They [lower prices] are counter-inflationary and represent a fundamental repositioning of prices for our customers which we intend to maintain for the long term." The supermarket chain made no apologies for this, he added.
He pointed out that Tesco was not the first chain to cut prices. While it did not believe in below-cost selling, it had to compete with the market circumstances, he added.
He also warned farmers that the introduction of the euro would put more pressure on food prices. "With direct comparability of prices in euros across Europe, consumers will demand to know why milk, or bread, potatoes, beans or chocolate cost more in Ireland than in France, Greece or Germany, or less for that matter."
He said everyone in the food chain would be expected to justify costs and to adjust their prices, if necessary, to a level consumers would accept.
He also advised farmers to think more about the consumer and pointed out that he had listened to the dairy farmers' conference for one hour, 35 minutes before the word "consumer" was mentioned.
Mr Pratt advised producers to look at the opportunities in the area of convenience foods. "There is, however, an urgent need for much more innovation in the Irish food industry to meet the demand," he said, and pointed to the growing demand for organic foods and the opportunities to divert into this area.
