Will the EU make a profit from its milk powder stocks?

It hasn’t gone unnoticed that the EU Commission is striving to offload its intervention milk powder stocks onto commercial markets at the present time.

Some commentators are now saying that such developments are, to a large extent, responsible for the softening in world market prices that we have seen over recent weeks.

And they are probably right. But let’s not forget that the powder in question was bought up by Brussels in order to help strengthen farmer prices that were languishing at all-time low levels just a few months ago.

So here’s the logic: The EU owns the milk powder stocks, so the commission has the right to sell them at a time of its choosing.

But here’s the real question: Is Brussels hoping to make a profit on the powder it is currently offering? If this is the case, then farmers have the right to ask about the use to which these (potentially) additional funds will be put.

Brussels has genuine form when it comes to turning a euro or two on its intervention stocks.

This was certainly the case back in 2013/14 when it offloaded large quantities of milk powder at the very height of the bull market that existed for all dairy products at that time.

The EU is funded by taxpayers’ money. I am not sure it is expected to make a profit, in any sense of the term. But I know that Brussels must be fully accountable for all of the commercial trading arrangements it enters into.

Given this background, it shouldn’t take the number crunchers within the European Commission that long to work out if the current commitment to sell milk powder stocks can generate profits for the EU.

If this turns out to be the case, then the surplus monies should be used to pump-prime a stability fund for European milk producers.

Farmers have every right to argue that they should be the sole beneficiaries of profits made on the back of their endeavours.

There is growing concern that Irish milk prices could be well below current levels, come the start of the 2018 calving season.

As is always the case, the so-called ‘experts’ cannot make up their minds as to whether we can expect a full-scale market crash next year or a more gentle settling down of producer prices.

My view is that we should prepare for the worst on all occasions. Given this rationale, the need for Brussels to step-in and provide some form of price stability mechanism for the dairy sector cannot be ruled out.

This is why it is so important for Brussels to clarify if it hopes to be in budget surplus – where its milk powder stocks are concerned.