Phil Hogan tries to reassure British farmers

With just days to go to the end of the EU’s dairy quota regime, Agriculture Commissioner Phil Hogan has hit back at claims by British farmers that it would put them out of business.

While the quota system is being abolished, a series of supports for farmers will remain and this, together with a growing global market for their product, should ensure a successful future for them, said Mr Hogan.

He said he could understand their worries but milk prices in the North were 25.8 pence a litre yesterday, significant increase.

There could be additional support from the rural development programmes. “We would be very flexible in negotiations to finalise the programmes between now and June,” he said.

Mr Hogan was also sensitive to claims that Ireland’s plans to increase milk production could help flood the market — a concern voiced by many countries.

The volume of milk produced in the Republic of Ireland amounted to less than 1% of the global milk supply and 5% of EU production, he said, adding: “Additional production in the Republic of Ireland is not going to flood the market with milk.”

At any rate, he said, he did not expect a big increase in production this year, given that there was a 5.5% increase in 2014 in the EU. “We coped well with markets and price, and the price now is the same as it was two years ago despite this massive increase,” said Mr Hogan.

While the experts agree the main challenge facing dairy is volatility, Mr Hogan said private storage aid, or intervention, was still available, as were targeted measures as seen in the response to the Russian ban.

Direct payments will be a cushion and 18 member states have used €800m specifically for the sector. Other supports were the broad range of rural development programme measures and the milk package when fully rolled out.

In addition, a Milk Market Observatory has been established and will give factual information on the market place that will be useful to farmers in terms of price and production, he said.

While competition on the world market was fierce, and would become more so, demand was also increasing as the number of middle class families grows globally and countries introduce dairy products into their diets.

Currently, 90% of EU milk is consumed in the EU. New Zealand vastly increased its production and exports, while the EU did not over the past decades. Mr Hogan said European dairy farmers were firmly on the road to a market-orientated system.

Conor Mulvihill, European Affairs director of the Irish Co-operative Organisation Society, said British milk producers in particular were worried about Ireland but the fact was that they increased production by 9.7% last year while Ireland’s increase was 5%, and that Ireland was the biggest importer of UK milk.

“Irish milk production is not depressing UK prices. Supermarkets can buy anywhere they want — this is a global market,” said Mr Mulvihill.

Quotas were introduced in 1984 when EU price supports saw farmers produce without having to worry about selling with resulting milk lakes and butter mountains.

The quota system was to be for five years and the quota has been gradually increased allowing exports to increase by 45% in volume and 95% in value over the past five years.