‘Dairy demand perspectives remain positive, but 2016 will be challenging’

The longer term demographic and dairy demand perspectives remain positive, but 2016 will be a challenging year, the Minister for Agriculture, Simon Coveney has said.

The Minister said that factors contributing to global price volatility in 2015 included the Russian Ban and the softening of Chinese demand on one side.

This was coupled with increased production among key global producers including the EU on the supply side, he said.

“Production decisions are made by producers, taking prevailing market conditions as well as their efficiency of production and price of inputs into account.”

The Minister said that the challenge posed by price volatility has been highlighted by his Department and others over a number of years.

My Department has, including through its agencies, invested significant resources in providing farmers with advice and technology designed to improve on farm efficiency, reduce production costs, and make farm businesses more resilient in times of downward price pressure.

“The abolition of dairy quotas in April 2015 allows farmers the freedom to make these production decisions on a commercial basis.

“That said, we obviously must offer support to the sector in times of prevailing difficulty such as we are now experiencing.

Meanwhile, the Minister welcomed the Presidency conclusions on the proposal for the package of support measures to address challenges in the dairy and pigmeat sectors which was agreed in Brussels at last month’s Council.

“The package includes a number of proposals by Ireland to the Commission and other Member States in advance of Council, in particular the doubling of the intervention ceiling for skimmed milk powder (SMP) and butter.”

In terms of input costs at farm level, I have called on the Commission to consider looking at temporary suspension of EU import tariffs on fertilisers to reduce input costs for Irish and EU farmers and the Commissioner is looking favourably on this request.

“Furthermore, with respect to financial instruments, I welcome the proposal for the European Investment Bank (EIB) and Member States to work together with the Commission on the feasibility of an EU export credit tool.

“However, I believe the EIB needs to be more proactive in designing loan products in partnership with Member States.”

Minister Coveney said that it remains clear that we need to deal urgently and effectively with this temporary problem.

“We must ensure that EU farmers are protected from the worst impacts of low commodity prices in an appropriate way, but remain well placed to avail of emerging opportunities when markets recover.

“Ireland is strongly positioned as a competitive producer of dairy, and while conditions are extremely difficult at present, Irish dairy farmers will be well placed to avail of the opportunity presented by market recovery in due course.”