The latest initiative to stem the collapse in milk price is a new departure for the Common Agricultural Policy and its approach to supporting farm incomes. It’s easy to forget but ensuring that farmers have a reasonable standard of living is one of the core objectives under the Treaty setting up the European Community and the Common Agricultural Policy.
Whoever thought up the concept of a payment for every litre produced less than was produced by the same farmer last year deserves commendation. Seeing as it has come on the proposal of the Commissioner for Agriculture Phil Hogan, he and his team must take the credit.
The huge response in Ireland to a scheme so late in the season shows the concept has struck a chord though it’s important that it stays as a voluntary concept.
It actually reduces supply of a product during what we hope is a temporary surplus.It gets money to those who are most exposed to the fall in prices – that is those who have expanded output in the last year and whose cost of production is greater than the price received from the processor.From an overall food demand point of view, in general, demand for food is broadly fixed regardless of price – that is, provided that people have enough to eat in the first place and of course, there are exceptions.
Oil exporters have now less money and demand for dairy products has eased in countries such as Nigeria, where corruption and economic mismanagement have inflicted enormous damage but nevertheless, that basic principle with food that a small oversupply sends prices crashing still stands.
The core question is whether this type of approach is more widely applicable to other commodities produced in Europe and where returns and incomes have fallen. Grain is the obvious example. It’s not that long ago since both the US and the EU had a set-aside policy for grain – that is where there was a payment made to farmers not to plant eligible land. The US solved its oversupply problem by ramping up its corn-to-ethanol programme, pursuing an aggressive export policy and having a farm income insurance scheme.
The EU has none of these programmes and grain farmers have paid the price, especially in a year like this.
Should the milk example be copied? So far, it’s clear from the amount of money allocated that the Commission is just testing the water with the new scheme but it’s a system with huge possibility for supplementing farm income in volatile times.
With Europe roughly producing 20% of the world’s beef, grain and dairy output, the argument could be made that we are simply taking product off the market so that others can expand but production can be expanded and a useful precedent with interesting potential has been set.
The latest initiative to stem the collapse in milk price is a new departure for the Common Agricultural Policy and its approach to supporting farm incomes. It’s easy to forget but ensuring that farmers have a reasonable standard of living is one of the core objectives under the Treaty setting up the European Community and the Common Agricultural Policy.
Whoever thought up the concept of a payment for every litre produced less than was produced by the same farmer last year deserves commendation. Seeing as it has come on the proposal of the Commissioner for Agriculture Phil Hogan, he and his team must take the credit.
The huge response in Ireland to a scheme so late in the season shows the concept has struck a chord though it’s important that it stays as a voluntary concept.
It actually reduces supply of a product during what we hope is a temporary surplus.It gets money to those who are most exposed to the fall in prices – that is those who have expanded output in the last year and whose cost of production is greater than the price received from the processor.From an overall food demand point of view, in general, demand for food is broadly fixed regardless of price – that is, provided that people have enough to eat in the first place and of course, there are exceptions.
Oil exporters have now less money and demand for dairy products has eased in countries such as Nigeria, where corruption and economic mismanagement have inflicted enormous damage but nevertheless, that basic principle with food that a small oversupply sends prices crashing still stands.
The core question is whether this type of approach is more widely applicable to other commodities produced in Europe and where returns and incomes have fallen. Grain is the obvious example. It’s not that long ago since both the US and the EU had a set-aside policy for grain – that is where there was a payment made to farmers not to plant eligible land. The US solved its oversupply problem by ramping up its corn-to-ethanol programme, pursuing an aggressive export policy and having a farm income insurance scheme.
The EU has none of these programmes and grain farmers have paid the price, especially in a year like this.
Should the milk example be copied? So far, it’s clear from the amount of money allocated that the Commission is just testing the water with the new scheme but it’s a system with huge possibility for supplementing farm income in volatile times.
With Europe roughly producing 20% of the world’s beef, grain and dairy output, the argument could be made that we are simply taking product off the market so that others can expand but production can be expanded and a useful precedent with interesting potential has been set.
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