This week, our agribusiness team, Eoin Lowry and Lorcan Allen, continue their
investigation into the infant formula market. There are two standout figures. Firstly, they have identified that the dominant consumer-facing players in the infant formula market are harvesting a 25% margin worth about €320m per annum from the raw material supplied by Irish dairy co-ops and farmers.
This week, our agribusiness team, Eoin Lowry and Lorcan Allen, continue their investigation into the infant formula market. There are two standout figures.
Firstly, they have identified that the dominant consumer-facing players in the infant formula market are harvesting a 25% margin worth about €320m per annum from the raw material supplied by Irish dairy co-ops and farmers.
To put this in context, these same Irish co-ops typically return a margin of just 2-3%.
Our investigation also identifies a serious erosion in the premium these infant formula players are paying for raw material – down from 20% a decade ago to just 5% today.
Unfortunately, it is an all-too-familiar tale for Irish farmers and in many ways mirrors what we have seen take place in the liquid milk market, where we have allowed retailers to undermine what should be a premium product by effectively competing with ourselves: co-op versus co-op and own-brand versus branded product.
Once again, we see a trend developing where we are allowing others to harvest significant premiums on the back of Ireland’s unique production model, while at the same time forcing farmers to operate on little above commodity prices.
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