ICMSA calls for dairy aid as CSO highlights soaring output

John Comer

ICMSA president John Comer has proposed that Ireland should pay farmers 10c for every litre less they produce versus 2015 to help correct market oversupply.

He said his voluntary supply-reduction scheme would compensate farmers for producing less, while allowing others to expand should they so decide.

“It’s clear farmers have been effectively abandoned to take the hit alone from the downturn in the dairy markets,” said Mr Comer.

“All other links in the supply chain are insulating themselves and policymakers at both national and EU level are allowing and assisting them to do so.”

Mr Comer said the cost of producing milk stands at around 28c per litre, whereas co-ops are paying around 22cpl on average.

“This just can’t go on and policymakers telling farmers that this is simply a trough in the market, to cut costs and to restructure loans to survive is simply pointless,” said Mr Comer.

Mr Comer’s proposal follows CSO figures showing Irish milk output up 18.5% in the year following the end of EU quotas — from April 1, 2015, to March 31, 2016. 

Irish milk output rose 38.9% in January to February 2016, from 340m tonnes to 472m tonnes, but fell 4.1% to 752m tonnes in April 2016 versus April 2015, the first fall in Irish output in 14 months. Germany produced 5.4bn tonnes of milk in January to February, up 7.8%.

While volume increases have been higher in larger EU states, Irish outputs grew at the fastest pace. 

Milk output rose by 3.7% in Germany and by 1.3% in France during 2015; Belgian output rose 14.2%, with the Netherlands rising 11.9%.

These output increases coincided with the Irish milk price falling by more than 40% from the highs of 38cpl in 2014 to 22cpl today.

European Agriculture Commissioner Phil Hogan said the EU is not alone in oversupply driving down prices. 

He urged farmers to produce less milk so as to help rebalance the market.

“It is now genuinely in the hands of dairy farmers who may, if they so wish, join forces and collectively decide to reduce production,” said Mr Hogan.

Mr Comer said responsibility for the dairy income crisis lies with the European Commission, saying nobody else has the power to address the issues. He said a voluntary supply reduction scheme would help rebalance the market.

In relation to the 4.1% milk output reduction for April, IFA dairy chairman Sean O’Leary said milk output growth is slowing in many of the EU’s main milk- producing countries, and other dairy regions around the world. 

He also said April 2015 milk supplies were boosted by carry-forward from the previous quota restricted month.

“The fall in the Irish April 2016 output also reflects the late and cold spring which saw poor grass grows, and cows indoors for part of the day,” said Mr O’Leary. 

“The bad spring was a factor in northern Europe, but affected most of all the grass-based farms in Ireland and parts of the UK.

“There is also little doubt that the fact that most European farmers are now producing at a significant loss is also starting to affect output growth. Danish milk collections were up 8.9% in March, but only by 2.7% for April. 

"French milk production was off 1.1% in March and is predicted to be back 3.6% for April, with slower growth also evident in Germany [+0.3% only for week 18], where 16% more cows were slaughtered in the first 17 weeks of the year.

“UK output is falling since February, with deliveries down 2.3% for the two weeks ending May 21, 2016.”

He said New Zealand is finishing its 2015/16 season with 3% less milk than in 2014/15, with Australia down 1.1% for its season to April. 

Only the US output seems to be buoyed by low feed and labour costs, with USDA reporting 1.2% rise in April output.

“Bearing in mind that spot milk and dairy prices, EU average quotes and international futures have all been firming — albeit timidly and from very low levels — it is fair to think that we are seeing the first signs that global supply and demand has slowly started to rebalance,” he said.

Agriculture consultant and land agent Mike Brady said: “Comparing April 2015 with April 2016 is not relevant due to the hold- over of milk in 2015 to avoid superlevy fines. January to April milk is up and will continue to increase.

“Ireland’s cost of production is lower than our European neighbours and, I believe, will win out in the long term because of this fact.”

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