‘There will be no bailout if milk price drops’ – Hogan

Milk prices will drop unless farmers heed the warnings regarding oversupply in the European milk market, European Commissioner for Agriculture and Rural Development Phil Hogan has warned.

Speaking to AgriLand, the commissioner stressed that the current level of supply – which has resulted from higher prices in recent months – is not sustainable.

He stressed that the issue should be a “major concern” for the sector; insisting that there will be “no bailout” if warnings are ignored at industry and farm level.

This should be a major concern for farmers; I’m trying to show farmers that if their industry does not have proper balance between supply and demand on the marketplace for dairy, then there will be a reduction in price for the farmer.

“Farmers have to understand that they cannot continue in the European Union by increasing substantially [production of] any particular product if they don’t have a market for it. We don’t have a market for the levels of production we have in the milk sector at the moment and this is a worry,” the commissioner said.

When asked if he anticipates whether or not the milk price is facing a drop on the horizon, Commissioner Hogan said: “If supply continues on the pace of growth that we have seen in the last few months, inevitably, there will be a reduction in price to farmers.

In terms of how soon the drop will come, he explained that it would depend on how well the industry and farmers were able to satisfy the balance of demand and supply.

I don’t rule out that the farmers and the industry can work out more balance between demand and supply, or indeed get more export opportunities around the world.

“But the ball is in their court; they know what the consequences are and there will be no financial bailout in the future – like we’ve had in the past – in the event where there is a massive reduction in prices for the farmers.

“They have been duly warned. If we can get the restoration of balance in the market, then there will be no cut; but, the onus is now on the farmers and the co-ops to manage supply better in order to achieve this outcome,” he concluded.