The State’s main supermarkets have announced price cuts across their dairy ranges.
It is the second substantial price reduction announced by retailers for milk and butter since last October.
Lidl was first to announce a reduction on Thursday, saying the cost of two litres of own-brand milk was falling by 10c and 454g of own-brand butter falling by 40c.
The price of 454g of butter has fallen from €3.99 last autumn to €2.99, while two litres of milk has fallen from €2.45 six months ago to now costs €2.25.
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Lidl said in a statement that milk and butter prices in Ireland were determined by a combination of international commodity market and global supply and demand dynamics.
Within two hours, Tesco had matched the Lidl price reductions after which SuperValu, Centra and Aldi all announced price cuts at the same level.
That is a reflection of the degree of price matching that has long been a feature of the Irish supermarket landscape.
The news comes as a surprise given that many of the input costs for dairy products – notably energy and fertiliser have been on an upward trajectory since the beginning of the Middle East war at the end of last month.
When the two price cuts announced in recent months are combined, they could mean a family that consumes six litres of milk and one 454g packet of butter a week saves just over €80 over the course of a year.
While the savings will be welcomed by consumers, farmers have expressed reservations.
Irish Creamery and Milk Suppliers Association president Denis Drennan said the reductions had left “massive questions unanswered”.
He said it remained unclear what the actual margins being taken by the retailer were.
Drennan said any retailer “expecting to be acclaimed and congratulated for dropping the price of butter, cheese and milk by a few cent is very questionable and cynical”.
He said the farmers producing the milk on which all the products are based “are receiving a price that’s less than the costs of production. They are milking twice a day and losing money twice a day.”
Drennan said the “real mystery starts when the products enter the retail system, and at that stage, they go behind very dark glass indeed.
“We don’t know what the retailers’ margins are; we don’t know what they are taking by way of margin for accepting delivery of a pallet and putting them in a fridge for a few hours. We do know that the man or woman milking a herd of cows twice a day is actually losing money now twice per day and losing income at precisely the same time as their two biggest input costs – fertiliser and energy – are going up like rockets.”
He repeated his call for retailers to publicly reveal what their margins on dairy are and questioned if they were using dairy products as a so-called loss leader.
