By Connor Lynch
THE current dairy price crisis is Coveney’s property bust, according to MEP Luke ‘Ming’ Flanagan.
The Roscommon politician said this week that Minister for Agriculture, Food and the Marine Simon Coveney has shown ‘poor leadership’ and a lack of understanding of the market in the aftermath of the removal of quotas.
While reports earlier in the year suggested that dairy farmers would proceed cautiously, it appears talk of a ‘dairy bubble’ was not unfounded. World consumption of dairy products is increasing by 2% annually and production is increasing by 4% annually, and most dairy farmers are planning to further increase production amid falling prices, said the MEP.
These falling prices coupled with the fact that many farms are already struggling with debt could spell trouble for the sector. Mr Flanagan attributes this danger to the ‘irresponsible manner’ in which Minister Coveney has been ‘relentlessly promoting’ dairying, including advocating a 50% increase in production without adequately assessing the market.
‘What if there is a price dip, or an interest rate rise, or if the euro gains strength?’ asked the MEP.
It has been mooted that lifting the Russian embargo would give the market a boost. However, Russia is still a buyer on the world market – just not from the EU.
It is also widely believed that Ireland has a cost advantage when it comes to producing milk, claims which Mr Flanagan describes as ‘misleading’ to the 18,000 dairy farmers in the country. While the price of grazed grass is competitive in Ireland, other expenses in this country are high by international standards, which places Ireland somewhere in the middle in terms of production costs.
Quotas on how much milk farmers are allowed to supply have been abolished since April 1st of this year and by 2020, it is expected that milk supply will have increased by 50%, with the dairy herd increasing by 300,000 cows. An estimated 10,000 jobs could be created by expanding dairy farms.
However, not all dairy farmers are getting carried away. Of the 63% of farmers who are planning to grow their output by 2020, only 8% will increase their production by more than a third.