Aid co-financing raised at dairy forum
Through their ICOS grouping, the milk processors encouraged Agriculture Minister Simon Coveney to introduce measures such as a farm income deferral scheme.
“Ireland has the opportunity to take a lead in this regard, and ICOS believes that European authorities and other Member States would be receptive,” said an ICOS spokesperson, during this week’s first dairy forum for stakeholders in the sector.
ICOS warmly welcomed suggestions that the Government will provide co-financing alongside the €13.7 million provided in temporary exceptional aid to Irish milk and pigmeat producers by the EU.
However, the resultant fund would represent only about 3% of the revenue loss suffered by farmers this year, and would be less than a quarter of the €100m milk price top-up support afforded to farmers by their co-ops this year.
At the dairy forum, chaired by Minister Coveney, Ornua warned of a difficult six to nine months ahead for the dairy industry, unless there is a rapid global milk supply correction.
According to the former Irish Dairy Board, current prices are below costs and are not sustainable; however the long term future is positive for the dairy industry, in which Ireland has a competitive edge in milk production.
Minister Coveney said it is important that Irish farmers and processors have the tools to help overcome the worst extremes of price volatility — tools such as futures markets, longer term fixed price contracts between farmers and processors, more stable supply and price arrangements between processors and purchasers of raw materials and finished products, and more flexible banking arrangements for farmers.
According to ICOS, Europe must commit to develop a functioning dairy futures market, to allow farmers or co-ops hedge their position in the market.
“It should be possible for farmers to either lock-in or hedge a milk price in the expected mid-range of volatility, for at least a portion of their supply, depending on their circumstances or risk appetite,” said an ICOS spokesperson.
According to co-ops, steps towards a futures market include development of the European Milk Market Observatory, to match similar USDA services; an Irish dairy market index reflecting the market realities for a small exporting dairy nation; and education and promotion, to increase farmer understanding of hedging and risk management.
Dairy and food industry consultant Dr Michael Keane told the forum a futures market would have to be a private initiative, but authorities would play a role in training, supervision and regulation. He said futures markets are a normal part of free markets, providing risk management benefits, but good public price information, education for participants, and appropriate regulation are required for futures markets.
