EU milk supply controls could have serious impact

THERE was a mixed reaction, particularly in Ireland this week, to the contents of the additional €500m support package announced by EU Farm Commissioner Phil Hogan to try to help farmers through the current income crisis.

The dairy, pigmeat and the fruit and vegetable sectors are the main focus as the European Commission announced that it would activate ‘exceptional measures’ to support farmers in crisis, which would complement last September’s €500 million in support measures to farmers. ‘This is a package of measures which can have a material and positive impact on European agricultural markets and it should now be given the chance to succeed,’ said Phil Hogan, Commissioner for Agriculture and Rural Affairs speaking at the Council of Agriculture Ministers in Brussels on Monday.

The actions include the next steps on doubling intervention ceilings for skimmed milk powder and butter, a storage aid scheme for pigmeat, a temporary increase in State aid limits; increased spending on promotion of EU produce inside and outside the EU. The Commission is also encouraging the Member States to make full use of the European Fund for Strategic Investment (EFSI) for investment in the agricultural sector and to look into the possibilities of setting up dedicated platforms for EFSI financing.

Minister for Agriculture Simon Coveney commented that ‘the package reflects the majority of the demands presented by Ireland to the Commission in our ten-point plan. In particular, the doubling of the intervention ceiling for skimmed milk powder and butter is a very significant announcement.’

However, he said: ‘I remain concerned about the references to supply control in the presidency conclusions.’

Cork South West Fianna Fáil TD Margaret Murphy O’Mahony also warned that milk supply controls from Europe have the potential to seriously impact on farmers in West Cork. ‘From an Irish perspective, bringing in such milk supply controls, even though they’re voluntary, represents a dangerous precedent in compensating for reduced production.

‘Ireland is heavily dependent on exporting dairy product to global markets.  90% of all milk produced in Ireland is exported.  Ireland produces about 5.5 billion litres of milk per year; while in 2015 total dairy exports were worth in the region of €4 billion in value.

‘While the measures are beneficial for France with an internal market of over 60 million people, this will hit exporting countries like Ireland, especially our capacity to take advantage when an upturn in the market takes place. Europe has taken the wrong decision here and this could seriously impact on the earning power of farmers in West Cork and across the country. 

She said: ‘We need to see a review of price intervention tools in the dairy sector in order to deal with the current market volatility and low prices crippling dairy farmers. The essential floor for support should be increased from 21 cent to the cost of production per litre to the average EU production cost.’

Meanwhile, reacting this week, the Irish Co-operative Organisation Society (ICOS) has expressed its disappointment at the decision by the European Commission and Council of Ministers to agree to the introduction of voluntary supply management measures.