One of the first jobs that Phil Hogan must do, even before he gets acquainted with the internal décor of the Farm Commissioner’s office in Brussels, is to sort out a realistic support package for the dairy sector.
Last week’s 7.3% drop in the prices paid at the Fonterra auction is further evidence of the growing weakness that is gripping international dairy markets. More worryingly, still, is the fact that the experts are now saying that the darkest hour is still ahead of us, regarding the potential impact that market forces will have on farmgate milk returns over the coming months.
During his ‘chat’ with members of the European Parliament’s Agriculture Committee in Brussels earlier this week, the then Farm Commissioner designate made it clear that he would use every market support tool at his disposal to support the dairy sector over the coming months. These measures include Aid to Private Storage, Intervention and the Export Refunds.
So much for the theory! The reality is that the European Commission has, in the past, been notoriously slow to act when it comes to putting real support measures in place for farming sectors coming under genuine economic pressure. As a result, the damage had been well before Brussels got round to doing something about it.
The reality is that Europe’s milk sector is now feeling the more than severe impact of China’s reticence to re-enter world dairy markets and Russia’s decision to ban EU food imports. As a consequence, the outlook for farmgate milk returns over the coming winter period is far from bright. This means that Phil Hogan must act immediately to introduce realistic safety net support measures for the dairy sector. And in this context the new Farm Commissioner must agree to significantly increase dairy intervention prices while, at the same time, committing to export refund-based support measures. Big Phil is about to find out that the honeymoon period associated with his new appointment will be very short lived