5 March 2009

3 minute read

Europe

IFA National Dairy Committee Chairman Richard Kennedy said: “It is essential that our Minister would lobby his fellow EU agriculture Ministers, and persuade the EU Commission that it must help put a floor on dairy markets.” Mr Kennedy said he was encouraging other European milk producers’ organisations, due to meet in Brussels later this week, to support the Irish initiative.

“IFA and representatives from the Irish dairy industry have identified continued full price intervention, and increased export refunds as the two priority measures which Minister Smith and his officials must secure urgently. Other schemes aiding skimmed milk powder and skimmed milk to be processed into calf milk replacer and casein, as well as butter into pastry, ice cream and cooking products, must also be re-instated for the longer term,” Richard Kennedy said.

“The maximum 30,000t of butter which may be sold into intervention at the full buying-in price will be reached within days. In the ensuing tendering process, the Minister and his officials must persuade the EU Commission to accept bids at the highest level that it can – just a fraction below the full buying-in price. Such a move would send a strong signal to commercial buyers that the market has bottomed out, that the product will not get any cheaper. This would likely cost the EU dairy market support budget far less than letting the tender procedure spiral down butter prices further, as it would encourage commercial buyers to buy now, taking product away from intervention,” Richard Kennedy said.

“While SMP intervention will take longer to reach the 109,000t limit, the same issue will then arise, and must be dealt in the same way,” he added.

“Export refunds are also set through a bi-monthly tender procedure, and a relatively small increase will allow EU and Irish butter to be exported in meaningful quantities. A somewhat larger refund increase would be required for SMP. The Minister and his officials must obtain from the EU Commission that it targets adequate volumes of exports, and sets refunds accordingly over the next couple of tenders. This would have a very positive impact on the EU market balance, and therefore on prices,” he said

“Finally, the schemes aiding protein (calf milk replacer and casein aid) and butterfat (pastry, ice-cream and cooking schemes), must also be reactivated. These schemes are for the longer term, but have a huge potential to move product and contribute to the recovery of dairy markets in the coming months,” he added.

“We are clearly living through an unprecedented crisis in dairy markets, and the majority of Irish dairy farmers will make no income from milking cows this year. Our European counterparts, many of whom have higher production costs than we do, face the same severe crisis. I will lobby for support from my European colleagues in COPA later this week, but ultimately, it is our Minister who can and must deliver a more supportive approach from the EU Commission in these exceptionally hard times for dairy farmers,” he concluded.

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