Glanbia chose the worst month of the year to cut milk prices
Glanbia could have held off for at least another month in deciding to reduce farmgate milk prices.
And, of course, once one processor takes this step, the others always follow.
As it has turned out, the decisions taken by Glanbia and the other milk buyers will impact on all dairy farmers at a time of year when producer input costs are at their highest levels.
The only option in these circumstances is to feed costly silage and even more expensive concentrates. And, of course, liquid producers always find themselves in such circumstances at this time of the year.
But was it really necessary for the milk buyers to cut the farm gate price at this juncture?
After all, New Zealand is still encountering drought problems while demand for dairy in countries like China continues to soar.
Countering all of this we had Phil Hogan’s words of warning to the EU dairy sectors – pointing to the dangers associated with the industry’s potential to over-heat, should milk output continue to grow in this part of the world.
However, surely, it’s his job to prevent such a catastrophe from happening in the first place. Currently, EU milk powder stocks are hanging over world dairy markets like a ‘Sword of Damocles’.
In the past, the European Commission has removed product from its intervention stores and sought not to use the commercial markets as a way of putting the food products in question to best possible use. The development of food aid schemes in countries around the world is a case in point.
By taking such an approach, Brussels ensured that the balance of the world’s commercial markets was not negatively affected.
I see no reason why steps of a similar kind cannot be taken when it comes to the management of the EU’s current intervention stockpile of milk powder.
We now know that intervention has, to all intents and purposes, been relegated to the history books.
And this is exactly what will happen, should Brussels not act soon to take EU milk powder stocks out of the game as a destabilising factor on world dairy markets.