Milk message gets through
For the past year, Irish dairy farmers have condemned the cut after cut made by the Commission in EU dairy product market support.
A belated response can be expected, now that the Commission’s policy is starting to bite on the continent, and the COPA and COGECA farmers and co-ops organisations in the EU have called for a new approach, after the next Mid Term Review intervention price cut, on July 1.
They warned the Commission that the prolonged series of intervention and export refund cuts prevented EU milk traders from making the most of strong global markets, and called for a period of stability this summer to ensure the EU milk sector’s competitive position is not undermined.
Mind you, Brussels ignored the farmers and co-ops, and immediately imposed another 42% drop in casein aid.
But the Commission can at last be expected to sit up and take notice, having ignored dairy farmers in the UK and Ireland, not surprisingly the loudest complainers, because they are the backmarkers in the EU milk price league.
However, Ireland and the UK, are seen as special cases in Brussels. Ex-Commissioner Fischler told the Irish dairy industry to look to new products and new customers rather than Brussels to boost milk prices.
Relying too heavily on commodities and not developing enough higher value branded sales, and producing lower milk constituents than most other member states, are the problems in Ireland, as far as the Commission is concerned, and it is unlikely to make concessions for Ireland alone.
The UK, too, is seen as a special case; the Commission cannot solve its problems of low sales of value added dairy products, and over-reliance on fresh dairy products, a market sector practically taken over by supermarket own labels. Another of their special problems is that their big milk processors pay nothing extra for additional protein above 3.0%, because they sell so much milk as protein standardised liquid milk.
Dairy industries in Ireland and the UK run the risk of being out of step with most of their EU counterparts, and suffering unduly from Commission policies which go down quite well on the continent.
But they can look forward to Brussels changing its tune, now that COPA and COGECA have started making a fuss.
The Commission doesn’t want to add to the stream of hundreds of dairy farmers who emigrated from continental Europe to the US in the 1990s.
They were fed up with quota limitations in the EU. They must also have consulted fortune tellers, and found out that the US farm gate milk price would pass out the EU price early in the new millennium.
US farmers enjoy a milk price of €30.34 per 100kg (12 month rolling average up to last April). The equivalent average figure is €29.04 in the ten EU countries where the Dutch farmers union and European Dairy Farmers examine farm gate milk prices. There’s the proof that EU dairy farmers need help, not penny pinching, from Brussels.
As for the prices in Ireland, €27.14 in Glanbia, and €27.50 for suppliers to Kerry Agribusiness, are hurting dairy farmers in a difficult production year.
A look around Europe shows why dairy farmers and processors in other member states have suffered in silence and left it late to call on the Commission for help.
Belgomilk paid at least €2 per 100 kg more for milk than Irish processors - easy when 26% of their sales is ice cream, a product which depends more on hot weather rather than Brussels aid.
They have also merged with BZU, creating a strong company that processes 30% of the milk produced in Belgium.
Higher fat and protein content ensure that Dutch dairy farmers continue to get one of the highest milk prices in the EU ... as do products like Campina’s new ice-cream straight from the freezer, which became the second-ranking scoop ice-cream brand in the Netherlands in less than six months.
Strong co-ops like Campina and Arla ensure farmers are paid well. Campina’s stated aim is to make up for the 40% of uncompensated cuts in EU price support up to 2008, through better business, and they achieved that in 2004, paying an average price of €29.06. Arla Foods of Denmark’s objective is a milk price 5% above a peer group of five big European co-operative dairies.
Unfortunately, the two failed in their bid to merge and form the world’s largest farmer-owned dairy company. The resulting stronger company would find it even easier to stand up to powerful supermarket buyers, and pay their farmers well.
Meanwhile, in Ireland, Glanbia Group makes no such promises: their 2005 focus is to complete their investments in New Mexico and Nigeria. Hopefully, good returns to farmers - as well as shareholders - will follow down the road from these investments.
Perhaps a better hope for farmers is Dairygold’s aim to become a world-class dairy and consumer foods business, and the most efficient and innovative milk processor in Ireland.
Their promise to get back among the first division buyers of milk in 2005 is a rare bit of good news for Irish dairy farmers in this difficult production year.
