‘Not reviewing intervention price was a missed opportunity’

The recent Dairy Aid Package from Europe to help beleaguered dairy farmers was not the correct response, according to IFA Dairy Chairman Sean O’Leary.

Instead dairy farmers need instruments to help deal with extreme volatility, he said, and it was a ‘missed opportunity’ to not review the intervention price.

Speaking from Normandy where he was this week attending the first European Dairy Meeting organised by the French dairy farmers’ union, FNPL, O’Leary said it was important that the current severe milk price slump would encourage European farmers to press their policy makers and industry stakeholders to urgently develop instruments to help them deal with extreme volatility.

“Our French colleagues’ analysis of the causes of the current downturn are the very same as ours: excessive global milk supplies at a time when global demand has been dented by the absence of China and Russia, and retailers leveraging those global trends to improve their margins at farmers’ cost,” O’Leary said.

He said the €500m package introduced by the EU Commissioner last month, while welcome, was not the correct response for French or European dairy farmers.

The EU Commission’s unwillingness to review the intervention price levels was a missed opportunity at a time when the effects of extreme milk price volatility have left most European dairy farmers producing at a loss.

He said the newly extreme volatility is now cyclical, and this situation will reoccur.

“It would therefore be wise for the EU to provide a genuine safety net that reflects the evolution of production costs as it is meant to in CAP legislation. Contrary to what Commissioner Phil Hogan contends, this does not amount to creating an alternative market.”

“I believe we farmers need to work together in Europe to press for practical instruments to help farmers deal with the extreme income variations they are now facing.”

France, he said, has limited forms of supply management through contractualisation already exist, and some farm leaders suggest that this could be part of a European solution.

“While I can understand this in a country selling 90% of its milk through the domestic retail trade, it would not work for exporting countries. Also, European production management under quota has not protected us from global price trends in the last eight years,” he said.

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