NATIONAL MILK AGENCY
The Liquid Milk Sector
1994 - 2014
1
Topics







The NMA
Producers Production
Processors Stature and Contribution
Imports of Liquid Milk
Retailers, Milk Traders and Multiples
Consumer, Choice and Traceability
The Future Post Quotas
2
Liquid Milk


Value Added Product
Ireland and UK
3
Establishment of the Agency

Milk (Regulation of Supply) Act, 1994
- Replaced Dublin and Cork District
Milk Boards
4
Role and Development
of the Agency

CHAIRMAN

PRODUCERS
PROCESSORS
CONSUMERS
RETAILER
DISTRIBUTOR




5 (elected)
4
2
1
1
Represents all interests in the sector
5
Staff of the Agency

CEO

2 Administrative
2 Inspectors


‘Lean Organisation’
6
Entirely Funded by the Industry
Itself
Levy Rate in 1994 – 0.127 c/l


Levy payable has decreased
by 9% since 1994
20% reduction in levy in 2013


Previous Rate - 0.145 c/l
Current Rate - 0.115 c/l
7
Agency is a Statutory Body



Statutory Powers
Adequacy of Compensation Statutory
Requirement
Regulation through Contracts
8
Constraints on the Agency

EU Environment

Price Fixing

Freedom of Movement of Goods
9
Liquid Milk Producers and the
NMA

Statutory Recognition
 Producers – special group

Statutory Right
 Adequate Compensation
10
Agency and Liquid Milk Prices

Price

Working Guidelines

Transparency on Price
11
SEASONALITY OF DOMESTIC MILK
SUPPLIES (BY SECTOR)
Year
‘13 ‘12 ‘11 ‘10 ‘09 ‘08 ‘07 ‘06 ‘05 ‘04 ‘03 ‘02
Peak to trough months ratios
Manu
8.6 9.1 6.8 8.7 8.1 7.1 8.2 8.7 8.2 8.0
8.2
8.9
1.8 1.8 1.8 1.8
1.9
2.0
5.8 5.6 5.1 5.8 4.9 5.4 5.6 5.7 5.5 5.5
5.6
6.1
Liquid 1.9 1.8 1.8 1.9 1.7 1.8
Total
12
DOMESTIC SUPPLIES, MANUFACTURING MILK SUPPLIES,
SUPPLIES BY REGISTERED PRODUCERS AND LIQUID MILK
CONSUMPTION (MONTHLY) 2013
*Milk sold for liquid consumption within the State including packaged milk imports.
Source: CSO/NMA
13
1995
1996
1997
1998
1999
2000
2001
2003
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
DIFFERENTIAL
45
40
35
30
25
20
15
10
5
0
ROI Liquid
ROI Manu
NI
GB
14
Liquid Milk Differential over
Manufacturing – 1995-2013
Calendar
Years
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Average
Differential
Prices –
Liquid1
c/l
32.84
34.07
32.85
32.31
32.20
32.09
33.26
32.70
32.26
32.26
31.00
30.51
35.28
37.58
29.17
32.44
35.51
34.10
38.87
33.23
Prices –
Manufacturing1
c/l
29.32
29.26
26.85
28.37
27.51
28.21
29.31
27.06
26.79
26.84
26.29
25.36
32.54
32.24
22.49
29.62
34.10
31.15
38.07
29.02
Price
Differential
c/l
3.52
4.81
6.00
3.94
4.69
3.88
3.95
5.64
5.47
5.42
4.71
5.15
2.74
5.34
6.68
2.82
1.41
2.95
0.80
4.21
15
Differential price

6.68 c/l – 0.80 c/l
16
DIFFERENTIAL
8
7
Differential
6
5
4
3
2
1
0
Years
17
All Year Round Contracts and
Pricing Systems
Milk Years
Contracts
Pricing
Systems
MMP+ FLAT
1995/96
3,206
471
2012/13
1,769
1,524
%
MMP
%
FLAT
2,735
15
85
245
86
14
Production level have been maintained
18
Average MMP and FLAT Prices
42
40
38
Prices c/l
36
34
MMP Prices
32
Flat Prices
30
28
26
Year
19
Producer Prices –
Payment of Producers –
Types of Contracts

14% FLAT Contracts

86% MMP Contracts

Move to linkage to international price –
constituent based
20
Changing Market Channels
21
Structure of Registered Producers by Processors’
Supply Bands 2013
Milk
Supply
Bands
No. of
Processors
m. litres
Registered
Producers
Annual Supplies
No.
%
m. litres
%
0 - 20
10
292
16
49
9
20 - 40
3
382
20
106
23
Over 40
2
1,209
64
300
68
Total
15
1,883
100
455
100
22
Structure of Registered Producers by Processors’
Supply Bands 1995 and 2013
Milk
Supply
Bands
No. of
Processors
m. litres
2013
1995
Registered Producers
2013
1995
Annual Supplies
2013
1995
No.
%
No.
%
m. litres
%
m.
litres
%
15
0 - 20
10
12
292
16
1,625
49
49
9
76
20 - 40
3
5
382
20
970
29
106
23
127 25
Over 40
2
3
1,209
64
749
22
300
68
294 60
Total
15
20
1,883
100
3,344
100
455
100
497 100
23
Own Label %

UK - 90%

ROI - 55%
24
Processor’s Contribution to the
Sector



R+D
New Products
Building Brands and Maintaining Brand
Loyalty
25
Increased Concentration
at Retail Level
2013*
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
%
%
%
%
%
%
%
%
%
%
%
%
Tesco
26
27
28
27
26
26
26
25.9
25.9
25.4
23.5
23.7
Dunnes
24
23
23
23
25
24
24
22.1
22.5
22.2
21.0
22.0
SuperValu
20
20
20
20
20
20
20
20.5
19.6
19.1
19.0
18.8
Superquinn
5
6
5
7
7
8
8
7.8
8.2
8.9
8.2
8.9
Lidl/Aldi
14
12
12
12
11
10
7
5.9
5.5
5.2
5.7
1.6
Centra
4
4
4
2
2
2
2
2.4
2.4
3.2
2.9
2.9
Spar
4
4
4
2
2
2
2
2.2
1.9
2.5
2.6
2.5
All Others
3
4
4
7
7
8
11
13.2
14.0
13.5
17.1
19.6
100
100
100
100
100
100
100
100
100
100
100
100
Total
Top 3 multiples 70% Market Share
26
Multiples
Battle of the brands: 55% Private Label
Recent Prices e.g. Tesco

Own Label - €1.49 for 2litres
40 c

(Branded €1.89 2 litres)
27
Annual Average Retail Milk Prices –
Annual Producer Milk
Prices/Producers’ Share of Retail Milk
2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 1995
c/l
c/l
c/l
c/l
c/l
c/l
c/l
c/l
c/l c/l
Retail Prices
- lowfat milk1 106
- whole milk2
Producer
38.9
Prices 3
Producer
37%
Price %
Retail4
105
34.1
111
35.5
111
32.4
112
29.2
111
37.6
91
85
35.3 30.5
85
31.0
85
32.3
77
32.8
32% 32%
29%
26%
34%
39% 36%
36%
38%
43%
– national average retail price of lowfat milk in 1 litre packs (CSO reports on 1 litre pack of low fat milk only since
January 2012).
2 CSO – national average retail price of whole milk in 1 litre packs.
3 NMA – national average producer price of milk for processing for liquid consumption.
4 NMA – Based on the NMA estimate of 94 c/l as the national average retail price for fresh milk the producers’ price as a
percentage of the retail price would be 41% in 2013 compared with 37% in 2012.
1CSO
28
Northern Ireland
Milk Supplies 1993 - 2013
MILK SUPPLIES
m. litres
Index
1993
1,309
100
2002
1,764
135
2003
1,772
135
2004
1,776
136
2005
1,865
142
2006
1,902
145
2007
1,918
146
2008
1,902
145
2009
1,772
135
2010
1,850
141
2011
1,977
150
2012
1,995
151
2013
2,008
153
29
MARKET PENETRATION OF DOMESTIC LIQUID MILK MARKET
BY IMPORTS 1996-2013
700
600
m. litres
500
400
Packaged Imports
300
Bulk Milk Imports
Domestic Supplies
200
100
0
2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996
Years
Market Share of Imports 2012 = 26%
2013 = 26%
30
NORTHERN IRELAND IMPORTS –
‘13
’12
‘11
‘10
‘09
‘08
‘07
‘06
‘05
‘04
‘03
‘02
‘01
‘00
‘99
‘9
8
‘9
7
‘9
6
millions of litres
Bulk
57*
59
65
58
57
63
62
58
55
55
48
42
50
43
44
45
16
0
Packaged
89
86
86
84
78
59
50
46
40
38
41
26
24
23
20
-
-
0
Total
Imports
146
145
151
142
135
122
112
104
95
93
89
68
74
66
64
45
16
0
*NMA
Estimated
26% of market
31
Producer Pricing Scheme
Changes


Move to Manufacturing price basis
Rise of international prices
32



Consumer
Choice
Traceability
33





Consumer Confidence
Fresh
Healthy
Natural
Value Added Product
34
LIQUID MILK MARKET - PRODUCT PROFILE 2001-2013
FIG. 2.2 FRESH MILK SALES PRODUCT PROFILE 2001 - 2013
100
80
Percentage
40
38
36
35
33
31
29
27
26
25
24
23
22
60
Lowfat & Skimmed
Whole Milk
40
20
60
62
64
65
67
69
71
73
74
75
76
77
78
0
2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Year
35
NMA & NDC

Logo Strategy of NDC

NDC logo milk must be registered with
NMA
36
April 2015 – Quota Abolished

Choices for Producers

Price Environment

Ability to Expand

Proportion Liquid v Dairy
37
NATIONAL MILK AGENCY
Thank You
38