Irish dairy farmers enjoyed a year of reasonable returns in 2017/18.
And it looks like the coming 12 months could be equally encouraging, from an income generation perspective.
However, we have seen all this before. Invariably, one or two years of decent milk prices gives farmers the false hope of the good times remaining the norm. Lots of new tractors and farm machinery are bought. Speculative land deals get the green light. It all adds up to a significant hike in borrowings.
Without warning, milk prices take a dive. Everyone panics and, by way of an automatic response, all our farm lobby groups head for Brussels, seeking the anticipated aid package.
To paraphrase Gerry Adams: “Volatility hasn’t gone away, you know.” As sure as night follows day, international milk prices will fall to precariously low levels at some future date.
But adding to the bad news at that stage will be the confirmation from the European Commission to the effect that there is no budget to fund a rescue deal.
Given this reality, surely it’s time for the Irish dairy industry to put in place some form of insurance scheme, which will act to ensure that farmers can avail of a sustainable milk price at those times when commercial markets cannot.
There is fat in the system now, given the current strength of milk prices. Diverting a small proportion of these funds into some form of self-help scheme for the dairy industry makes perfect sense.
It’s called putting something aside for a rainy day.
The reality is that Ireland’s dairy industry cannot rely on outside assistance the next time that international markets move in the wrong direction.
Self help will be the only show in town at that stage.
The co-ops may well point out that they have already responded to the challenge of volatility, courtesy of their commitment to long-term contract supply arrangements with farmer-suppliers. But these measures involve only a proportion of Ireland’s milk producers, not the industry as a whole.
It makes perfect sense to me that individual milk producers should have the gumption to take a proportion of the profits they are making now and hermetically seal them in some form of savings account.
Moreover, this should be done with the full backing of farmers’ bank managers, who will act to ensure that the monies involved can only be released at a time of severe income pressure.