One third of 2016 EU intervention scheme volumes filled in 6 weeks

The EU public intervention scheme is now over one-third full just six weeks into 2016, according to latest figures from the Milk Market Observatory (MMO).

To date over 37,000t of skimmed milk powder (SMP) has been offered to the measure in 2016.

Under the intervention scheme, operators in the dairy sector can sell butter and SMP to public authorities at the above mentioned fixed prices up to a limit of 50,000t for butter and 109,000t for SMP.

In case those ceilings are met, purchases continue through a tender system.

So far in 2016 Ireland has offered 4,305t to the scheme which represents some 11% of the total volumes of SMP offered to the scheme so far this year.

In 2015, Ireland placed 1,843t of SMP into public intervention, with a total amount of 40,280t of SMP going into intervention in 2015. We have already exceeded our 2015 figure.

The current intervention prices include €221.75/100kg for butter and €169.8/100kg for skimmed milk powder (SMP) these prices equate to 21c/L in terms of Irish milk prices.

In a bleak assessment of the dairy market, ICOS’s next CEO TJ Flanagan has warned that the extent to which dairy co-ops can support milk prices is limited.

Flanagan who takes up the top job in ICOS in May said in an analysis of the current dairy market the latest EEX Exchange indices for Butter and SMP demonstrate the ongoing weakness in dairy markets.

“This week’s butter index value at €2670 and the corresponding SMP number of €1645 make sobering reading.

“Those numbers, if converted into a milk price, suggest a value of around 20c.

According to Flanagan, that’s a price level not seen since 2009 and one that could be ‘enormously damaging’ to farmers livelihoods.