Negative reactions to milk supply control plan

EU member states have been cleared to offer cash to dairy farmers reduce their milk supply, expected to be about 10c per litre of supply reduction they achieve.

Negative reactions to milk supply control plan

Irish dairy co-ops have warned of fundamental problems with the move, which was announced at last Monday’s meeting of EU agriculture ministers. Details of the measure will be given to member states very shortly.

ICOS, representing the Irish co-ops, warned it makes no sense for European farmers to reduce supply whilst the rest of the world is free to produce.

“Secondly, voluntary measures are just the thin end of the wedge,” warned a spokesperson.

“It wouldn’t take much to convert them into compulsory measures if the market was bad enough. Or worse still, to apply a levy to Irish expansion to compensate French or Spanish farmers who want to reduce.”

EU agriculture commissioner Phil Hogan confirmed the Commission will activate Article 222, for a limited period, enabling dairy producer organisations, inter-branch organisations and co-ops establish voluntary production and supply agreements.

The never-before-used Article 222 can be applied only in cases of severe market imbalance.

Agriculture Minister Simon Coveney said he opposed new EU funding to incentivise milk supply reductions, and confirmed the measures proposed are voluntary, to be agreed at the level of the first purchaser of the milk.

“They do not constitute a return to quotas, and both the Commission and the Presidency were crystal clear on this point.”

Meanwhile, the European Milk Board dairy farmer grouping, which has long supported a return to mandatory EU-wide control of milk production, said the scheme announced by Mr Hogan will not stabilise the milk market, even with increased intervention ceilings, also announced this week.

EMB-President Romuald Schaber said voluntary reduction of supply in some co-ops will immediately be counteracted by increased production from others.

France wanted the new milk control scheme to include either payments to processors who temporarily reduce production, or restriction of EU market supports only for processor who reduce supply.

Mr Hogan has said that only 10-15% of the EU milk supply would at best be covered by Article 222 measures.

IFA National Chairman Jer Bergin said voluntary supply reductions will not boost milk prices, and are totally contrary to last April’s legal abolition of milk quotas.

ICMSA President John Comer said Monday’s measures will not boost milk prices.

He said milk supply control must be voluntary, and farmers who scaled up due to quotas ending must not be compelled to cut back.

ICOS President Martin Keane welcomed the EU decision to increase “de-minimis” state aid limits to €15,000 per farmer per year.

“This provides the Government with a real opportunity to introduce national measures such as the proposed ICOS “5-5-5” income stability tool.”

He welcomed doubling of ceilings for dairy intervention, and plans to examine feasibility of an EU export credit tool, but called for intervention to be extended to the end of 2016, and for EU and national mobilisation of EIB funding for affordable capital in the dairy industry.

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