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At a plenary debate on the milk price crisis in Brussels on Thursday, MEPs quizzed Agriculture Commissioner Phil Hogan on the measures needed to alleviate pressure on dairy farmers and stabilise their incomes.
The Commissioner said he will propose a further increase in the skimmed milk powder intervention ceiling from 218,000t to 350,000t, but that producers need to reduce their milk supply to bring about balance in the market.
Watch Commissioner Hogan propose measures to alleviate the milk price crisis at Thursday's debate:
“Producers have to take their share of responsibilty in terms of bringing about balance in the market place between demand and supply, and that is what article 222 is about. It’s a voluntary measure but I’ve doubled the state aid ceilings in order to allow member states to incentivise article 222 measures if they so wish,” he said.
Article 222 allows farmers and processors to bypass European competition rules and agree a reduction in milk supply to push up prices.
The producers in the member states need to be aware that they are continuing to stoke the fire.
Northern Ireland MEP James Nicholson said that voluntary cutbacks will not work. Defending producers, he said it was not good enough to blame them for the dept of this crisis, and that it was time for the farm council "to wake up".
"If you have an increase of an extra 6-7% of milk, a market has to be found for that. The producers in the member states need to be aware that they are continuing to stoke the fire. They're continuing to make the problem worse, not better, and certainly voluntary cutbacks will not work.
"We have a situation where the retailers are getting away on a coach. They're laughing all the way to the bank at the cost of the farmer, and the sweat off his brow in the production of that milk," he said.
Hogan expressed his frustration at member states who have not yet spent their aid as part of the Rural Development Programme, emphasising the importance of cashflow during a time of crisis.
“A significant number of member states and regions, in respect of the targeted aid package last September, have not yet spent their money. It is very difficult to seek more money if eight member states, including France, have not spent their allocation yet.
“It’s up to member states to trigger these mechanisms. At a time of crisis, cashflow is important and this is one of the reasons why I have been so frustrated at the slow rollout by some of the member states at the targeted aid.”
Crisis reserve
Commissioner Hogan also said he was willing to consider the proposal of a crisis reserve for dairy farmers.
“A number of people have mentioned the possibility of the crisis reserve. Any further financial support would inevitably raise the issue of the activation of the crisis reserve, which could generate in excess of €400m. I have been reluctant to propose this in the past because it represents nothing more than a redistribution of farmers payments. However, it is something that I am willing to consider,” he said.
Experts in the Milk Market Observatory acknowledged that some improvement in market sentiment was perceptible against the background of slowed down milk production in the coming months and global demand remains healthy. However, they concluded that market fundamentals have not really changed and that an improvement in the supply/demand equation remains necessary.
Superlevy deductions
IFA is calling on the Commission "to act without delay" to ease the cash flow stresses on dairy farms, including superlevy deductions from this month’s milk cheque and merchant credit debt in all sectors.
Meeting with Commissioner Hogan in Brussels after Thursday's milk price crisis debate, IFA president Joe Healy said that there is now real urgency.
"The majority of dairy farms will find themselves in the red this month as a result of milk prices of 23-25c/l which are below average production costs. Those dairy farmers who have invested in recent years, who just saw the first instalment of their Superlevy repayment 2016 leave their milk account, and carry some merchant credit or other bills, will be in even deeper financial trouble," he warned.
Last week it emerged that the EU Commission had confirmed it would not be possible to implement a deferment of the superlevy fine for 2016, as "the legal basis for the regulations under-pinning the scheme are no longer in existence".
However, Minister for Agriculture Michael Creed told Fine Gael TD Patrick O'Donovan in a parliamentary question this week that he raised the matter with Hogan in their recent bilateral meeting, as well as at last week’s Council of Ministers meeting, and encouraged him "to reflect again on whether a legal basis could be found to facilitate a further deferral in superlevy repayments for farmers".
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