Six years on, ICMSA’s John Comer still fears milk price volatility ’nightmare’

ICMSA is getting into election mode, in the run-up to choosing the association’s next president in late December.

Candidates are not yet declared, but the 40-year-old ICMSA deputy president, Pat McCormack, who farms near Tipperary town, is seen as the obvious contender so far, for the hot seat at the top of the Irish Creamery Milk Supplier Association.

That position has been held since December, 2011, by John Comer.

His has been a steady hand on the tiller, successfully steering the Association through six years which were so contrastingly traumatic for the country’s other main farmers’ organisation. IFA’s general secretary Pat Smith and president, Eddie Downey, stepped down after a huge financial controversy erupted late in 20156 over Mr Smith’s pay package.

Mr Comer, who will have completed his allowed two terms as the milk suppliers’ leader in late December, has given us his perspective on current issues, informed by his leadership of the country’s dairy farmers.

The dairy and beef farmer from near Castlebar, Co Mayo became an ICMSA National Council member in 2000, and was elected Deputy President in November 2007.

Your presidency coincided with setbacks for farmers, including a fodder crisis in 2013/14 and a dairy farm income slump last year. What did you learn from these setbacks during your time as President?

The first thing to note is the essential difference: the fodder crisis was brought on by a really wet winter spring and was therefore a “weather event”.

To that extent, it was a question of reacting quickly and convincing the Government of the extent and depth of the

crisis, and coming forward then with policy responses to the problem itself and to the resultant debt incurred as farmers desperately

purchased and imported fodder.

The dairy income crisis of 2015/16 was not really weather related. It was instead a direct result of incorrect policy and hesitant reaction that dropped the bottom out of the market, and saw milk suppliers receiving a price below the costs of

production for over a year.

We have to say that we found the reaction of both the Government and the EU Commission to the price and income collapse to be much more hesitant and slower than was required.

The idea that the market would “work itself out” was wrong, because what was actually happening was that where farmers had fixed or rising input costs and loans, they were being forced to chase with milk volume what they were losing on margin.

So, even as the milk price dropped, farmers had to increase production to try and make up for the fall in their price.

It’s important to note here that it was only the price that was paid to the farmers that collapsed.

The price paid by consumers never fell by a cent.

It was only the farmers that were wiped out by the price collapse; other links in the dairy supply-chain kept or increased their margins, and did very well out of the fact that they were able to dictate a price backwards to the farmers that was less than it was costing to produce the milk.

Quite early on, ICMSA, and our colleague organisations in the European Milk Board, told the Commission that supply volumes would have to be reduced on a voluntary basis, and I stress voluntary, to put a floor back under the market, and eventually, our solution of a voluntary supply reduction scheme was introduced, and it made an almost immediate difference.

Actually, the present dairy price rally dates practically exactly to that policy change.

I remember well the Dairy Forum in June, 2016, when dairy processors were predicting it would October 2016

before a milk price increase would happen.

Commissioner [Phil] Hogan announced the Voluntary Milk Supply Reduction scheme in July, and within weeks, the same milk processors announced price increases for July milk.

That was not a coincidence.

You seem to be a little more sceptical about the Commission’s commitment to the best possible Brexit deal for Ireland, why?

I don’t think that “sceptical” is the exact word.

But it’s fair to say that I’m anxious about a situation where our €5bn-odd of food and agri-exports to the UK could end up being held

hostage by another member state demanding that, for instance, their people have a freedom of movement concession from the UK similar to the one we’ll presumably continue to enjoy.

I want to believe that Ireland’s interests are front and centre and, in fairness to Mr Barnier [the EU’s chief Brexit negotiator], he has been consistent on this.

But I recently had to take issue publicly with a prominent French farm leader who stated that his members could not accept an open border between North and South, over which non-EU imports could move freely.

This is exactly what I fear, that others, through no real fault of their own, just can’t appreciate that a hard border would be disastrous for the farming and agri-food sectors, as well as raising issues that we had left behind, with huge difficulty and sacrifice by all sides.

I have to say that the course being pursued by the Irish Government seems to me to be the right one. We have to make all other parties, whether in the UK or the EU, understand that the preservation of our centuries old, multi-billion-euro food trade with the UK on a tariff-free basis is a central national strategic objective.

There’s one other aspect of Brexit that needs to be emphasised.

The CAP Post 2020 will have to be maintained at present levels of funding, at least.

That means that the remaining Member States, including Ireland, will have to make good the UK contribution.

I’ve said it from the first day of my Presidency of ICMSA, and I’ll go on repeating it to my last: CAP and direct payments are not a subsidy to the farmer, they are actually a subsidy to the retailers, that enables EU consumers to buy the highest quality food, produced to the highest standards of sustainability, at a price that does not sufficiently reward the farmer.

These farmer direct payments are the cost of the EU’s ‘cheap food’ policy.

You’ve described excessive milk price volatility as a “nightmare” for dairy farmers. What’s needed to solve this problem?

“Nightmare” is not an exaggeration. It’s not possible to run a family farm with fixed or rising costs against a background where the milk price can swing from 22cpl to 34cpl in one year. Where you can go from having no income whatsoever in one year to a reasonable level of income the next year, while raising your family at the same time.

Farmers don’t want a peak-and-trough model. ICMSA certainly doesn’t want that. How can you plan any business on that basis? How do you invest or borrow?

We need a mechanism that addresses income volatility, and that’s why ICMSA has recommended a number of initiatives to the Departments of Finance and Agriculture, Food & the Marine.

One is a Farm Management Deposit Scheme that allows farmers to put away funds in good years in a official and tax-compliant deposit scheme, that they can draw down in bad years, when price volatility, or price falls, mean that income disappears.

We think it’s a measured and workable model that will tackle the nightmare, and we’re quietly confident that our arguments have been heard, and might bear fruit in next month’s budget.

John Comer, ICMSA

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