EU Farm Commissioner Phil Hogan remains ‘cautiously optimistic’ that the EU dairy crisis is close to the end, pointing to promising signs of a recovery in key commodities over the past three months.
During his opening address at the European Dairy Association (EDA) annual congress in Nice (December 1st to 3rd), chaired by yours truly, the Kilkenny man said global demand, notably for butter and cheese, started to pick up since mid-2015. EU butter prices are now on a par with the historical records of 2013, with prices for butter and cheese expected to remain robust through early 2017.
The upswing is also reflected in better farm-gate milk prices, up 10% from July to October, with the Commissioner hopeful of a steady positive trend to around €0.31 per litre by 2017. He welcomed the ‘reaction from the supply side,’ pointing to a ‘fall in production month by month since June,’ while the voluntary milk reduction scheme taken up by around 58,000 farmers, including 4,000 from Ireland, is now playing its part in the fourth quarter of 2016.
EU milk collection decreased by 3% in September 2016 compared to September 2015, while a further production slowdown is expected for the rest of the year.
The first priority must be the farmer, he told the 200-strong audience at the conference in the southern French city in the Côte d’Azur, adding that the reduction in output should restore a better equilibrium between supply and demand.
During the opening session with four top dairy executives from Valio (Finland), Arla Foods (Denmark), Hochland (Germany) and Lactalis (France), the EU’s farm chief called for greater market orientation in the industry, saying ‘as long as we produce what the market demands, recovery is guaranteed.
‘The sector as a whole must think strategically – market signals must echo throughout the chain so that production matches outlet options,’ he stated.
‘Industry could play a better role by giving information to farmers and providing good signals to the market,’ he outlined, adding that ‘there is no point in producing a surplus if there is not going to be market for it.’
Future CAP DESIGN
As farmers continue to grapple with new rules, policymakers are already starting to discuss the contours of the next Common Agricultural Policy (CAP) post-2020. Building resilience in the EU’s farming sector to cope with future shocks will be a central plank in talks on future farm policy, the Irish Commissioner announced this month.
Other key elements in the upcoming debate will be enhancing the income safety net, meeting international commitments such as the UN climate deal struck in Paris last December, the position of small farmers, generational renewal as well as access to finance and credit.
Hogan was ‘very hopeful’ that additional financial products – developed in co-operation with the European Investment Bank – would be available to farmers in 2017. He plans to build on discussions that took place under the Dutch presidency and the Cork 2.0 declaration on Rural Development in early September.
These are all “useful building blocks”, he elaborated. In terms of timing, the Commission is expected to launch a 12-week public consultation on the shape of the CAP post-2020 in January, which would form the basis of what is known as a Communication or a ‘White Paper’ by the end of 2017, ahead of legislative proposals in (early) 2018.
With Hogan’s term of office due to come to an end on October 31, 2019 – it is still unsure what his future plans are – he conceded the ‘timeline was tight,’ with the fall-out of the UK’s vote to leave the EU likely to complicate matters. But he is keen to develop legislative proposals on the future direction of European farm policy for the European Parliament and Member States to consider. Is this a case of déjà vu?
• Rose O’Donovan is editor of the Brussels-based publication AGRA FACTS & a regular contributor to the video platform www.vieuws.eu/food-agriculture/