The European Commission must take immediate steps to increase dairy intervention prices, according to Lakeland Dairies’ CEO Michael Hanley.

“The fact is that current intervention prices do not accurately reflect the costs of production on dairy farms across Europe. And the sooner the Commission recognises this fact the better. Intervention prices should, at the very least, be set at between 27 cent and 28 c/L,” he said.

“Brussels controls the dairy sector in Europe by virtue of the fact that the milk quota regime remains in place. It is also inequitable for farmers to be expected to pay for the political decisions taken at the heart of the EU.

“For example, Russia’s decision to introduce a ban of EU food imports was as direct consequence of the policies espoused by Brussels with regard to the developments in Ukraine earlier last year.”

Hanley went on to confirm that a number of EU manufacturers are now submitting dairy produce into intervention.

“As a business we have market outlets for all our produce,” he said.

“However, these recent developments are serving only to depress commercial markets still further. And this will have a knock-on effect regarding the prices that processers can offer farmers.”

The Lakeland Dairies representative also noted the recent weakening of the Euro against Sterling and many of the world’s leading currencies.

“When the Euro was first introduced it was worth 64 pence Sterling. During the years which followed, the UK currency weakened significantly until, at one stage, both currencies were almost at parity,” he commented.

“For most of the past decade the Euro has traded against Sterling at values between 85 and 86 pence. Recent weeks have seen that figure drop further to around 78 pence.

“In theory, a weaker Euro will help Irish food exports. But where dairy is concerned we are trading from a very low base point at the present time. The increased costs of inputs, such as packaging, from countries outside the Euro zone must also be factored into the equation.”