Lakeland Co-op’s Chief Executive Michael Hanley has told Agriland that the European Commission must act this week to support the European dairy sector in response to the EU food import ban introduced by Russia a fortnight ago.

Speaking at today’s Virginia Show, he added:“Ireland does not supply large quantities of dairy products to Russia. But a number of other EU members states do. This has created the problem of displaced export orders having no home. The only way this problem can be resolved is for Brussels to step in and support Europe’s dairy markets, and the sooner the better.”

Commenting on the results of this week’s Fonterra auction Michael Hanley said that international markets seem to be stabilising, but at a very low base.

“The prices paid this week equate to a New Zealand producer return of 21 Euro cent per litre. Prices at that level will not encourage dairy farmers in that part of the world to feed much meal over the coming months. This may well take the edge off New Zealand’s milk output for the remainder of this year.”

Commenting on the reasons for the fall in international milk prices over recent months, Michael Hanley pointed to the dramatic increase in exports to China at the beginning of this year as a causative factor.

“Much of this was spurred on by the fact that China reduces its import tariffs during the early months of each calendar year. And, as a consequence, dairy processers in countries around the world, targeted that market with expensive dairy products at the beginning of 2014. The result of this trading activity was a Chinese market that was over supplied with extremely expensive dairy products. Fundamentally, there is too much milk in the world at the present time. And until the supply demand equation is brought back into balance, Irish producer prices will be affected accordingly.