Stephen Cadogan: September 7 pressure will test Phil Hogan in his new job

Opponents of property taxes, domestic water charges, and local government reform came off second best against Minister for the Environment, Community and Local Government Phil Hogan — and farmers across the EU shouldn’t underestimate him for a second in his new post as EU Agriculture Commissioner.

He said in July he opposed increasing intervention prices to help dairy farmers, warning that it “would give the wrong signal” to the industry, in the new situation where production quotas no longer exist.

That refusal to raise dairy intervention prices means that if Commissioner Hogan relented today, it would take the European Parliament and EU Council an astonishing 18 months to get through the legal process of co-decision.

The Commissioner said with milk quotas gone, farmers must follow market signals; the EU goal was not to produce as much as possible, but as much as a market can be found for.

In as many words, he said enough measures were already in place for farmers — including €820 million of coupled support (worth between €74 per cow in France and €300 per cow in Hungary).

Back in May, he noted most dairy farmers were still getting “a reasonable return”, but variation in prices paid to farmers in different member states were quite significant.

Last week, he again ruled additional measures for the dairy sector, such as raising the dairy intervention price — despite a summer of farmer protests, led by milk producers.

With China no longer buying large amounts of milk powder, Russia not importing, and no limits on EU milk production since last April, the market headed south fast, and Commissioner Hogan obviously does not want to defy the market trend by doing anything to encourage milk production, which would only drive prices down further.

But it remains to be seen how the Commissioner will react to the pressure sure to come on him from EU agriculture ministers at their September 7 emergency Farm Council.

It was on July 24 that the Luxembourg EU Presidency called an emergency meeting on the farm crisis.

But putting that meeting off 44 days until September 7 shows how the EU is happy to leave farmers swinging in the wind. In the meantime, some powerful ministers have come under intense pressure to save their farmers from bankruptcy.

Ironically, the dairy farmers Hogan knows best, back in Ireland, are probably the most efficient across Europe, but he will be asked in September to save farmers with higher costs in EU powerhouses like Germany and France.

He could do worse than look to the solutions advanced by Irish dairy co-ops, through ICOS.

Solutions such as developing the market opportunities in East Asia, Iran, and Brazil — or improving trade relations with Russia, to ease the sanctions which have hit some EU farmers as hard as the Russians. Some of the €868m the EU is collecting from farmers in super levy fines could be spent there.

Farmers and food exporters took a bullet for the EU on that one — so they are owed huge favours.

Commissioner Hogan can also deliver some payback by bringing direct payments forward, and enabling countries follow the French example of deferring this year’s farm tax bills, to help tide farmers over.

Super levy funds could also be used to bolster the Hogan Fund EIB plan for agri-investment.

None of these measures would damage the market by driving extra milk production.

A very good use for super levy funds would be to boost the development of price hedging, futures markets, margin insurance and other risk management measures to ensure that farmers and their dairy co-ops are better protected from market volatility.

These measures are the very least needed by EU dairy farmers; but more is needed for those milk producers in some countries forced to accept outrageously low prices, because they have zero power in the food chain — despite Commissioner Hogan promising action in this area to strengthen farmers.


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