Urban areas could face a chronic shortage of milk if dairy farmers' margins were squeezed any further, the Minister for Agriculture, Mr Walsh, predicted in the House yesterday. "The balance must be maintained. We are at the limit of it at present. If farmers are squeezed any further in terms of their margins, there could be a shortage in the supply of milk to urban areas, as there was in the 1920s and 1930s."
The Minister had no function in setting the retail price of milk. Matters related to competition and to the functioning of the market at retail level were for the Competition Authority and the Director of Consumer Affairs. It was clear, however, that if producers could not recoup their costs of production, supply patterns would be disrupted.
Mr Walsh was asked by Mr Ivor Callely (Fianna Fail, Dublin North Central) if he was satisfied that milk was available to consumers at the lowest possible price. And Mr Sean Ryan (Labour, Dublin North) sought Mr Walsh's views on whether the current milk prices in some retail outlets would have an adverse effect "on the price per gallon available to farmers".
While competition in the milk market existed, Mr Walsh replied, "the worry is that milk at consumer level will be sold by retailers at below the cost of production". His information was that liquid milk was being used "as a break-even or loss leader" in a price war by multiples.