Speaking on RTÉ Radio 1’s Today with Sean O’Rourke programme on Friday morning, Coveney clarified that the current crisis in dairy markets is linked to geopolitical events such as the Russian ban on EU food products and the over-purchasing of dairy products in China in recent years.
He said for the media to link the removal of quotas to the current crisis is not a fair reflection of the work that had gone into preparing for the end of the quota era.
“It was predicted by many analysts that 2015 would be a bad year for price volatility,” he said. “This is due to a number of factors not related to the lifting of milk quotas such as the Russian ban on food products and the over-purchasing of milk products in China. [China] has a lot of milk in store so the demand is just not there at the moment.”
He added that price volatility is not new. “In 2009, the price fell to 21c/l. Then for the last three years we have had strong prices where supply was not meeting demand and farmers were getting as high as 40c/l. These low prices are not the norm for dairy farmers and they will improve.”
Call for raise in intervention price
Coveney will be meeting with EU Commissioner for Agriculture Phil Hogan in Brussels on Thursday 27 August to discuss the tools the European Commission can use to help dairy farmers through this difficult period. The tools range from an increase in the intervention price, which the minister says he will again ask Hogan to consider, to increasing supports for aid to private storage. The intervention price is currently the equivalent of around 21c/l and Coveney said he would like to see the price increased to 25c/l at the very least.
Export refunds, where dairy product is sold cheaply on the market and the EU makes up the difference, will also be up for discussion but Coveney added this is the least likely of all the options to be implemented.
These tools will also be discussed at the emergency meeting of EU agricultural ministers in Brussels on 7 September.
The minister said he has also asked Irish banks to be flexible with dairy farmers who have taken out loans in order to expand.
“I want to say to farmers at this time that I know this is a difficult time but it’s temporary. It will be resolved in time and there is growing demand for dairy products across the globe.”
Referring to the positive mood in Ireland around the time of the removal of quotas back in April, Coveney said farmers were right to celebrate it, as the future for the dairy industry is very bright.
“There has been a 10% increase in milk output since the lifting of quotas so the future is very bright for the dairy industry in Ireland,” he said.