Projected dairy income rise queried
Following a detailed assessment of the analysis on the effects of the Agenda 2000 and CAP mid-term review, policy director Martin Varley said ICOS believes the projected increase in the average dairy farm income is not realistic.
In fact, dairy farm incomes would decline if more realistic milk prices and the full capital cost of expansion and the effects of inflation had been included in the analysis.
Mr Varley said the FAPRI assumptions do not allow for the expected commission management of export refunds and other milk product supports, which would force down EU milk prices in tandem with the proposed intervention price reductions.
The FAPRI analysis is based on assumptions which would require the commission to become relatively more generous than in the recent past, in its support of market prices relative to the new intervention price levels, which will apply after the 15% intervention price cuts are implemented in 2005/’07, and for the additional 10% intervention price cuts, proposed in the mid term review of the CAP. Mr Varley said FAPRI is projecting farm level prices for milk in 2012, which are about 10 to 11 pence per gallon (2.8 to 3.0 cent per litre) higher than the new intervention farm level equivalent price, which will apply at that stage.
“It is highly unlikely that Irish and EU milk prices would be maintained year on year at such a level above the intervention farm level equivalent floor.
“This is especially so, as even after the intervention price cuts, the EU will continue to export a substantial quantity of dairy products with the aid of export refunds and other market supports,” he said.
ICOS will continue to lobby for full compensation for any intervention price cuts, as it is required to maintain real income in the sector in future.
