In the 12 months to date, €110 million worth of casein and other dairy sector sales have been lost as a result of excessive cutbacks in price supports to intervention levels, the minister was told at a meeting in her offices yesterday. Industry bosses told her it was time to put this issue at the top her agenda.
The urgency was given added impetus when it emerged yesterday evening the EU Commission is to cut refunds on skim milk and whole milk powders by 46% and 17% one month before the July 1 CAP reform cuts were due to come into effect.
ICOS director general warned the moves would knock another €100m off dairy sector returns in the current year on top of the €110m already identified at the earlier meeting with he minister.
Mr Tyrell said the latest move by the EU underlined the seriousness of the situation and he again called on the minister to act in the interests of the dairy sector.
Apart from Mr Tyrell, also present at the meeting were the chief executives of Kerry Group Plc, Hugh Friel; Irish Dairy Board’s Noel Cawley; Glanbia Plc’s John Moloney; Dairygold’s Jerry Henchy; Lakeland Dairies’ Ed Prendergast; Connacht Gold’s Aaron Forde and ICOS director of policy Martin Varley. Mr Prendergast told reporters afterwards he was concerned that the minister said the changes in price supports had not been high on her agenda.
However, in a statement afterwards, Ms Coughlan said she would take up the issue with Brussels. And the industry would be kept informed “regarding any developments over the coming weeks,” the minister added.
Under the Medium Term Review, price supports were supposed to be eased out over a number of years. However the commission’s proposal to cut subsidies from €2bn to €1.1bn in 2006 was totally unacceptable. So was the argument they had been instructed to make budget savings by the council given it spent €600m less than budget in 2004.The industry representatives also accused the EU of acting in bad faith.
It was understood the cutback in price supports could be made up though better market prices, but that has been made impossible by current policy. The idea was to prepare the dairy sector in the EU to be more competitive as markets open up.
That envisaged investment which cannot be done if the EU fails to soften its approach.
As a result of its action, global market prices have slipped to intervention levels, severely hitting prices to farmers and undermining the entire sector, said the delegates.
Jerry Henchy of Dairygold said the situation was so precarious he was unable to quote prices for customers. “Dairygold has difficulty entering into contracts post July 1 because we don’t know what export refunds will be, he said.
Mr Moloney and Mr Prendergast of Lakeland added that the deep cuts to price supports so early has pulled prices down to intervention level.
That was the “key” to their case against the EU, they said.
“Intervention has become the target price, which is a complete breach of faith by the commission,” the dairy chiefs said.