Dairy industry welcomes EU moves to bolster export credit insurance

Moves by the European Commission to engage on a short consultation on the availability of private short-term export-credit insurance capacity – in light of the economic impact of Covid-19 – has been welcomed by Dairy Industry Ireland (DII).

This is especially important for Irish dairy as it exports over 90% of its produce, the Irish dairy processors’ representative body highlighted.

DII has been requesting this tool as the crisis has developed along with a range of other market-stabilising tools such as Private Storage Aid.

The consultation is very short, having been launched on Monday, with the deadline for responses tomorrow, Wednesday, March 25, at 12:00pm. This underlines the commission’s haste to move on this, the industry body noted.

Commenting on the development, director of DII, Conor Mulvihill, said: “We need to throw open the full national and EU toolbox to help stabilise markets for companies and their suppliers. This move represents a logical step in that direction.”

Export credits enable non-EU buyers of goods and services to delay payments; therefore, creating a risk for EU sellers if they don’t get paid.

This is an increasingly active part of Irish dairy in recent years as the sector expanded its customer base in international markets.

Exporters, like the Irish dairy industry, usually take insurance to cover these risks.

At present, under state aid rules, Ireland and EU countries are not allowed to provide insurance for exports to other EU countries and nine Organisation for Economic Co-operation and Development (OECD) countries unless they show that the risks are not marketable.

This proposal from the commission will launch a public consultation to check if public short-term export credit insurance should be made more widely available, DII noted. This consultation will be run by DG Competition.

Ultimately, it considers removing countries from the list of countries for which state intervention is not permitted.

DII represents primary and secondary dairy manufacturers including the specialised nutrition sector in Ireland.