Arrabawn's decision to exit the liquid milk sector and close its liquid milk processing plant in Kilconnell, Co Galway, is a direct result of the growing power of the top five retailers in Ireland, Irish Creamery Milk Suppliers Association (ICMSA) president Pat McCormack has said.

Liquid milk suppliers must still have an outlet for their milk under terms and conditions that, at a minimum, are on a par with what is available in Arrabawn, argued McCormack.

The ICMSA has been in contact with Arrabawn, stressing the importance of liquid milk producers, according to McCormack.

The association also wants a long-term guarantee that affected milk suppliers can remain in the liquid milk business.

'Systematically undermined'

"The liquid milk business has been systematically undermined over many years by a relentless margin squeeze exerted by the multiple retailers on both the processors and farmers.

"This had been repeatedly pointed out to politicians who had chosen to ignore the issue in the same way as they had ignored the same abusive practices in other dairy products, meat and vegetables," he said.

There is no good in politicians making sympathetic statements today on this issue

McCormack argued that unless and until politicians do something to stop this, there will be further closures in rural communities such as Kilconnell, where farming, food production and processing are the economic basis for everything else.

“There is no good in politicians making sympathetic statements today on this issue.

"If they want to prevent these closures, they need to immediately introduce legislation to curb the power of the large multiple retailers and allow farmers and processors the opportunity to make a reasonable margin from liquid milk production and other farm products," said McCormack.

IFA reaction

Irish Farmers' Association (IFA) liquid milk chair Keith O'Boyle described the news as a "sad enough situation".

He added that seeing a dairy co-op such as Arrabawn decide to exit the business is a serious indictment of the liquid milk sector.

“[The] IFA has been highlighting the precarious situation of the liquid milk business for the last number of years and this is now playing out with Arrabawn leaving the sector,” he said.

A regular supply of fresh milk on supermarket shelves is in real jeopardy

He argued that there must not be a situation where any other processor or farmer feels forced to leave the liquid milk sector.

The only way to guarantee this, he said, is by retailers paying a fair price for fresh milk.

"If this doesn’t transpire, a regular supply of fresh milk on supermarket shelves is in real jeopardy," he said.

O’Boyle added that all liquid milk suppliers in Arrabawn must not find themselves at any disadvantage from this proposal.

“There is an onus to ensure they are fully accommodated and not forced into changing their dairy farm systems due to the decision of their milk processor to exit the business," he said.

ICOS reaction

Irish Co-operative Organisation Society (ICOS) president James O'Donnell welcomed the announcement of the Arrabawn Co-op board's decision in principle to accept an Aurivo Co-op offer to purchase its liquid milk sales book.

"I commend the courage of both co-ops in agreeing this historic and strategic move to rationalise the domestic liquid milk business”, he said.

He believes this move will prove to be a positive one for liquid milk suppliers across the region and nationally.

"It will allow Aurivo to achieve even greater scale and reach in their consumer food business.

"It will also allow Arrabawn the opportunity to focus on their core manufacturing business, which has been transformed in recent times, particularly with the recent investment of €30m in the Nenagh plant," he said.