Supply management or quotas has long proven to be a completely redundant policy measure, according to Conor Mulvihill European Affairs Executive at Irish Co-operative Organisation Society (ICOS).
“This was very much illustrated in our last dairy troughs in both 2009 and 2012 when despite Europe being completely within the quotas system framework, prices still collapsed.
“It is an antiquated system which is of absolutely no use in a globalised dairy trading world where we cannot control supply in other regions. In fact, Canada remains the only significant dairy bloc in the globe with a supply management system, and even that is creaking badly, with farmers exiting dairy in increasing numbers.”
He said the reality is that this is a ‘demand’ driven crisis with Russia and China off the market for different reasons.
“With future population growth of the globe driving demand into the next generation for European Dairy enterprises, it would be criminally stupid if we misunderstood the problems and resorted to ineffective and costly local supply management measures to try and control world dairy prices.”
Following the growing concern about the economic situation in the dairy sectors in certain Member States of the EU, the Luxembourg Presidency decided to convene an extraordinary Agriculture Council meeting on Monday, September 7, 2015, in Brussels.
At the last meeting of European Agriculture Ministers, the Minister for Agriculture Simon Coveney asked EU Agriculture Commissioner Phil Hogan to give serious consideration to an intervention price increase.
Poland and Belgium recently moved to follow Lithuania’s lead in selling dairy product into intervention.
It now means that there is currently just under 1,200t of skimmed milk powder (SMP) in public intervention with Belgium offering 250t and Poland 320t last week.
Lithuania which was the first country to use the measure since 2009 offered a further 320t of (SMP) last week taking their total amount of product in intervention to 606t.