The Irish Creamery Milk Suppliers’ Association (ICMSA) has claimed that a temporary milk supply reduction scheme, similar to the one introduced in 2016, is currently “on the agenda” of the European Commission.
The association said that it is “rapidly coming to the conclusion” that a repeat of the 2016 scheme must be considered.
Pat McCormack, the association’s president, said the several dairy farmer representative bodies across the EU have approached the commission on the possibility to reintroduce the scheme.
“The blunt facts are that the current milk prices are not sustainable and there is nothing on the market horizon that indicates the kind of upswing required if prices are going to move upwards at a rate that [will restore] some degree of viability to milk production.”
However, McCormack added that the situation shouldn’t “excuse the processors from their lamentable failure to work the figures and roll out fixed milk price schemes that would tide their suppliers through to the market restoration that would eventually come”.
He said that current circumstances are similar to those that applied in 2016 when the EU deployed a voluntary, temporary supply reduction scheme.
McCormack said this scheme “worked successfully” to put a floor under below-cost-of-production milk prices, and brought about a successful market restoration.
“Milk processors and their representative organisations are very good at preaching sustainability to farmers, but since January 2023, milk prices have fallen to levels well below the EU average, and to a level where many dairy producers are now producing milk below the cost of production.
“That wipes out dairy farmers and highlights the fundamental contradiction at the heart of the sustainability debate. If you’re not economically sustainable then every other type of sustainability becomes irrelevant,” the ICMSA president commented.
“If the people demanding sustainability can’t or won’t pay a sustainable price then this becomes a meaningless exercise. That’s where we were in 2016 and that’s pretty well exactly where we are now in 2023,” he added.
According to McCormack, the measure introduced in 2016 – which saw the commission introduce a payment of 14/kg of milk less compared to the previous year’s production – had been “spectacularly successful”.
“Within weeks of its introduction, milk processors in Ireland went from a scenario of talking down prices to actually increasing milk prices the immediately following month.”
“It gave farmers the option to dry off cows early, reduce theirs costs and, critically, it forced the processors to pay a realistic price for milk that returned a level of margin to farmers,” he said.
McCormack added: “Processors need milk volumes for their processing plants and customers, and the scheme compelled the processors to confront the truth that they cannot expect farmers to continue to produce that milk at a loss. It forced the processors to pay the price that guaranteed their supply of milk.”
He said that the parallels between 2016 and 2023 are “becoming ever more striking”.
The ICMSA president called on Minister for Agriculture, Food and the Marine Charlie McConalogue to publicly back plans for a supply reduction scheme.
He added: “We are in the same place where the processors are happy to ignore reality, and it looks like they are going to have to be forced to face that reality in the same way.”