Opinion

Dairy production forecasts need to be tempered

I hate to be a harbinger of gloom and doom, but has it not occurred to anyone within the dairy industry – and all of the associated lobby groups – that the first six months of 2015 could well be the most challenging period ever faced up to by the sector?

In my opinion, a combination of more than difficult market conditions, whopping super levy charges and the hangover of big tax bills from 2013/’14 will combine to create the perfect storm for Irish milk producers over the coming months. Add in the projected 20% year-on-year increase in milk output at farm level and one is left asking the question: what steps must be taken now to ensure that the Irish dairy sector reaches the second half of 2015 with all of its assets intact?

The good news is that we have time to put in place a plan of action to ameliorate the impact of what’s coming down the track. But the clock is ticking. The core difference between the challenges that are about to impact on the dairy sector and the catastrophe which befell beef earlier is this year is the ‘forewarned is to be forearmed’ factor. But what can be done in a practical sense to make a real and positive difference for dairy farmers? In my opinion, three lines of attack need to be opened up over the coming weeks.

In the first instance Minister Coveney needs to re-vitalise the campaign to secure Ireland a butterfat re-adjustment for 2104/15. And given that Phil Hogan is now holding the reigns of agriculture in the EU, we – at last – have a strong ally on our side in Brussels. This, it must be pointed out, was not the case when Dacian Cioloș was the man in charge.

And then there are the banks. Rumour has it that the agri experts within these organisations have pencilled in milk price of around 27c as the minimum return that will float all boats when it comes to farmers making their repayments on the various finance deals agreed over the coming months. In truth, a price-led approach to dairy farmers by the banks during the first half of 2015 will not cut the mustard. Individual producers cannot buck the market and the banks will have to demonstrate a fair degree of flexibility when it comes to dealing with their dairy clients in these circumstances. And it is crucially important that the banks come out publically to confirm this type of policy approach without delay.

The final piece of the jig saw puzzle takes the form of the muzzling exercise that must be carried out to deter the UK dairy industry, and all of its associated lobby groups,  from using the envisaged increase in Irish milk output as the sole scapegoat for the forecast downturn in EU and international dairy markets. The UK farming and food press is currently filled with stories relating the Harvest 2020 growth targets for milk and the perceived negative impact this will have on producer returns throughout Europe over the next decade. And, of course, it suits the agri-political groupings in Britain to allow this type of mis-information to go out into the public domain unchallenged.

The organisation best placed to put all of this right is the IFA. Its presidential team and commodity specialists meet regularly with their counterparts in Britain under the auspices of COPA and courtesy of direct meetings involving all of the relevant groupings. It is crucially important for the IFA to tell its UK counterparts about the real drivers for growth with the Irish dairy industry and the fact that Irish dairy products will not be causing a collapse in UK and EU dairy markets. This approach should also be backed up with a very proactive media campaign, involving IFA and the Irish Dairy Board.

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