‘More tools are needed to manage volatile milk markets’

More tools are needed to manage the volatile milk markets, according to the Irish Farmers’ Association’s (IFA’s) National Dairy Committee chairman, Tom Phelan.

Speaking to AgriLand, he said: “The abolition of quotas has introduced more volatility into the market.

“Intervention can only do so much; but in a post-quota era, where you have a possibly ever-increasing supply of milk, we need more tools to manage volatility.

Volatile markets

“In the new Common Agricultural Policy (CAP) reform that’s coming down the tracks, we will be calling on the commission to introduce more opportunities for farmers to manage risks along with intervention; because, I don’t think intervention on its own would be enough to manage it,” the dairy chairman said.

“We are in a far more volatile situation than we have been in the past.”

Regarding any supply reduction schemes, Phelan stressed that these should only be implemented on a voluntary basis – if farmers want to go down that route.

“As a country, we were held back for 30 years by milk quotas and we hadn’t the opportunity to build our milk industry properly before milk quotas were introduced,” he said.

“We have a natural advantage over a lot of other EU countries for producing milk in Ireland.

We are a grass-based system; our costs are very, very competitive. Our carbon footprint would be the lowest of the milk producing countries in Europe – and we need the opportunity to maximise that benefit.

On the topic of the current levels of skimmed milk powder (SMP) currently in intervention by the European Commission, Phelan said: “Remember, they have made profits from skimmed milk powder in the past.

“We’ve asked the EU [personnel] to manage that intervention stock in a responsible manner, and they’ve assured us that they will.

“They sold 24,000t recently in the last tender process – and hopefully that’s the start of a trend, that they will be able to offload that product onto the market in a responsible manner.”

The chairman noted that skimmed milk powders have risen in recent weeks, and is hoping that this will continue in the future.

Processor support

Finally, Phelan called on the country’s milk processors to continue to support farmers through what has been an extremely harsh number of months, to look after the long-term future of the sector.

He said: “Markets are challenging at the moment; we’re well aware of that. But April has been a very, very difficult month for farmers as well; and, obviously, some are still not out of the crisis we’re currently in.

We’re calling on all milk processors to support farmers as best they can through this, if they want to maintain the long-term viability of this industry.

“Now farmers are appreciative of the support that they’ve got, but I think they’ll need more before they’re in a position where they can cope on their own.”

Recent letters from some processors to farmers included help-lines of charities such as Samaritans, Phelan said, so they know how serious the present situation is.

Clarification

The chairman also wished to clarify his view of the policy outlook for the Irish dairy sector, following what he described as “incorrect media reports” circulating elsewhere.

“When I said ‘the honeymoon is over’, I was referring to my own four months in the job of National Dairy chairman – not to the outlook for the dairy sector [as a whole].

“And with regard to future dairy policy at EU level, the IFA National Dairy Committee has not agreed to a milk production reduction scheme. I never suggested this; this was clearly an incorrect interpretation of my presentation,” he said.