ICOS Dairy Policy Executive T J Flanagan expects the European Commission to come forward with a gesture  that will positively change market sentiment at the upcoming ‘dairy summit’ in Brussels on September 7.

“No one is expecting Phil Hogan to agree an immediate, upward revision of intervention prices,” he said.

“But even a signal on his part to suggest that the Commission is open to the principle of reviewing the current intervention arrangements would send very positive signals to the market place.”

Flanagan confirmed that it would take a number of months before any agreed changes to the intervention system can be put in place.

“Pushing for enhanced intervention measures was never going to be a short term solution to the problems facing the dairy sector. But current market prices are not sustainable. The market will change in an upward direction. And a push from Brussels might well be the stimulus to make this happen.

Flanagan puts little credence on the result of the most recent Global Dairy Trade (GDT) auction event, which saw a 14.8% rise in prices.

“Fonterra reduced some of the product volumes offered by up to two thirds,” he said.

“And, on that basis alone, it had widely been predicted that prices would rise.”

The ICOS representative believes that the GDT auction has become part of the problem, in the context of the challenges facing the international dairy industry.

“Auction results are fluctuating to a much more significant degree than is the case with the likes of the Ornua Purchase Price Index and its Dutch equivalent. Real market prices are not as low as those flagged up on the GDT at the present time.

“Given these circumstances one has to question what role GDT has to play in reflecting actual trading conditions on the world’s dairy markets.”