Dairy sector urged not to talk itself into crisis over price
European Agriculture and Rural Development Commissioner Phil Hogan and Agriculture Minister Simon Coveney have each issued separate appeals.
Mr Hogan told the IFA’s 60th anniversary event in Dublin last week it is hard to find a sector with more promising prospects than dairy. The recent price declines, from very high levels, are as expected.
“There will be volatility in light of quota abolition and the 5.5% increase in production which we saw in 2014, but this will be a short-term issue. So, let us not talk ourselves into a crisis. I will spend most of my time in 2015 exploring with member states new market opportunities and am confident of many successes,” he said.
Mr Coveney issued a similar appeal during a Dáil debate before Christmas, following Teagasc predictions that the average milk price in 2015 will fall to 27c per litre, a reduction of over 10c per litre on 2014, with an income fall over 50% possible on some dairy farms.
“It is important we do not talk ourselves into a crisis. The price in Ireland is still above 30c a litre. We are in a period in which many dairy farmers are in drystock farming and not as much milk is being produced.
“The key issues are anticipating what the price will be for milk in the spring and allowing co-ops to offload much of the produce they have in storage, be it cheese, butter or powder,” he said.
Mr Coveney said deputies should not forget farmers have seen the upside of price volatility in the past two years. The highest milk price ever seen was achieved during that timeframe.
“We are now potentially looking at the downside of price volatility. That is why we need to consider new pricing models for milk. This is starting to happen. If farmers agreed to lock 40%, 50% or 60% of their milk into a mid-term pricing contract, to take peaks and troughs out of price volatility.
“It was very difficult to get farmers to do this in the past couple of years when prices were at an all-time high. They are certainly looking at doing it now,” he said.
Mr Coveney said at a domestic level, they must ensure the banks show the necessary flexibility to keep dairy farmers in business.
Over a five-year period practically every dairy farmer in the country will be profitable and running a good business, he said.
Deputy Éamon Ó Cuív (FF) said milk must be at a realistic price, well north of 27c a litre, as otherwise there will be a problem.
A decrease in milk price to 27c a litre would be unsustainable for smaller producers, said Deputy Martin Ferris (SF).
