Intervention price must increase – Dairy UK
The Chairman of Dairy UK has written to the UK Farming Minister George Eustice, to raise concerns about the rapidly increasing amount of skimmed milk powder being submitted into intervention.
Chairman David Dobbin said that despite depressed returns, the growth in global milk production, especially from Europe including the UK, is still rising and running well ahead of global demand.
“As a result, stocks of powder, butter and cheese are high and skimmed milk is being intervened across Europe, including the UK.”
He also said that if the current milk supply production profile is maintained the UK dairy industry is facing a large surplus of milk over immediate demand this spring peak.
David repeated Dairy UK’s long-held position that the UK Government should do what it can to increase intervention support.
“We are asking you to use the lobbying weight of the UK Government with the Commissioner to achieve a smooth transition re intervention at this difficult time. This would help avoid further distress at farmer and processor level and would be a positive way in which DEFRA can help the UK industry.”
As you know, market conditions in the dairy sector are extremely challenging and are likely to remain very difficult for the year ahead.
Despite depressed returns, the growth in global milk production, especially from Europe including the UK, is still rising and running well ahead of global demand. As a result industry stocks of powder, butter and cheese are high and skimmed milk powder is being intervened across the EU including the UK.
If the current milk supply profile is maintained through this year’s peak production period (April to June) the UK dairy industry is expecting a large surplus of milk over immediate demand. Inevitably, most of this surplus will be directed into powder production and much of this will go into intervention as the market is already saturated.
I am sure that you and your officials have noted the speed at which intervention is currently filling up. Dairy UK is concerned that the intervention cap will be reached before this year’s peak production period. Once the cap is reached, in accordance with articles 3.1 and 3.2 of Council Regulation 1370/2013, the Commission will undoubtedly introduce a price tendering process for any further product being submitted into intervention. This will inevitably lead to a reduced intervention price, driving farm gate prices down even lower than present.
Two possible solutions to this would be to:
- Ask the Commission to keep the same price as now;
- Ask the Commission to reset the intervention cap of 109k tonnes for SMP and 50K tonnes of butter once they are reached, rather than introduce a tendering process at that stage.
We are asking you to use the lobbying weight of the UK Government with Commissioner Hogan to help achieve a smooth transition re intervention at this difficult time. This would help avoid even greater distress at farmer and processor level in the UK dairy industry and would be a positive way that Defra could support us at this time.
If you need any further information please don’t hesitate to contact me.
Dr David Dobbin CBE Chairman Dairy UK