Warning: heading for zero milk profitability

PROFITABILITY in Irish dairy farming could be heading to zero by 2008 when the single farm payment is taken out of the calculation, warns Fine Gael Agriculture spokesperson Denis Naughten.

Non-active dairy farmers, merely by taking their single farm payment, could end up better off than those actively farming now, he said.

In the near future regional quotas may not be filled, because potential new entrants without a decoupled payment cannot enter dairy farming, and there is a massive fall off in the number of active dairy farmers, according to Deputy Naughten.

He said it is imperative that the EU sets a base equivalent to an Irish Dairy Board on-account price of 31 cent per litre.

Responding in the Dáil to Deputy Naughten, Junior Agriculture and Food Minister of State at the Department Brendan Smith said he was concerned at the impact reductions in EU aids and subsidies have on the ability of the Irish dairy industry to export to third countries, and that Minister Mary Coughlan specifically raised this and secured the support of a number of other member states in the May 30 Council of Ministers meeting.

Minister Smith said milk prices in Ireland have remained stable for the past number of years, despite reductions in intervention prices for butter and skimmed milk powder. Farmers were compensated for reductions in 2004 to the amount of €60 million, or 1.2 cent per litre. Further compensation of 2.4 cent per litre, amounting to €120 million, will be paid this year as part of the single farm payment.

Minister Smith added, “The key for Ireland, and the area that we directly influence, is internal competitiveness.”

“We cannot escape the fact that there are internal structural impediments in our domestic dairy sector that need to be addressed so that we remove the factors that inhibit growth and development.”

“At farm level we must look at increasing the scale of operations, reducing costs where possible, and encouraging a profitable future in the sector for the next generation of dairy farmers.”

“At processor level too there is a need for greater rationalisation. The industry here is competing against much larger enterprises that are increasing their scale at a faster rate than we are.”