In a regulation applicable from this Monday, the Commission has raised the volume of intervention SMP for sale five-fold from 21,780t to 101,061t. All products placed into intervention until 1 April 2016 can be sold from next month’s tender, compared with 15 November 2015 previously.
This means the Irish stock available for sale has jumped from 1,771t to 7,336t. SMP stored in five new countries is now open to bidders.
No sale this month
This is despite the absence of any sale being concluded through this month’s tender. A committee of EU experts agreed to rejects all bids last week, because offers ranged from €800/t to €1,300/t only. The top offers were the lowest received since the Commission began to sell intervention stocks one year ago. The current EU price for SMP is €1,480/t, but a bid for 40t from intervention stocks was accepted at €1,390/t last month.
European Commissioner for Agriculture Phil Hogan told the Irish Farmers Journal Dairy Day event last month that “the product has to be sold”.
“At a time when the next EU budget is being negotiated, I cannot have half a million tonnes of SMP in intervention stores,” he added.
There is currently a total of 376,005t of SMP in EU intervention storage.
No fixed-price intervention next year
Meanwhile, a separate regulation proposed by the European Commission to remove the guaranteed intervention price next year has been progressing and is now expected to be submitted to EU agriculture ministers at their next Council in January. The volume of fixed-price intervention buy-in, usually 109,000t per year, would be set at zero for 2018 and a tender system would operate instead.
“The Commission, with a vote at the Committee for the Common Organisation of the Agricultural Markets, would decide on a case by case basis what volumes should be bought-in and at what buying-in price,” the text proposes.
Public intervention would clearly drift away from its objective of ensuring a fair standard of living for the agricultural community
The measure is based on the Commission’s assessment that while butterfat prices are set to remain high, “SMP will continue to be de facto a by-product with lower valorisation unless new outlets materialise”. This would leave SMP market prices under the €1,698/t intervention threshold and force the Commission to step in and buy the product from next March.
“Should this occur, while farmgate milk prices are at satisfactory levels, public intervention would clearly drift away from its objective of ensuring a fair standard of living for the agricultural community,” the Commission argues.
Even as milk supply increases in the EU, “raw milk prices paid to farmers are likely to stay in 2018 at a level which renders dairy farming remunerative, because of the current strong demand for butter and cheese despite the relatively low prices commanded by dairy protein”.
Commissioner Hogan told the Dairy Day event that EU member states had already agreed in principle to intervention operating under a tender system in 2018.
’Negative signal’
The IFA has described the proposal as worrying because “it would send a very negative signal to buyers as to the value of fresh as well as intervention SMP, and could further postpone a recovery in prices”, as well as setting a precedent for the future.
The ICMSA wants intervention to kick in automatically if farmgate prices fall below 30c/l.
Read more
SMP intervention tender proposal should be linked to milk price - ICMSA
Milk prices heading for a crash
In a regulation applicable from this Monday, the Commission has raised the volume of intervention SMP for sale five-fold from 21,780t to 101,061t. All products placed into intervention until 1 April 2016 can be sold from next month’s tender, compared with 15 November 2015 previously.
This means the Irish stock available for sale has jumped from 1,771t to 7,336t. SMP stored in five new countries is now open to bidders.
No sale this month
This is despite the absence of any sale being concluded through this month’s tender. A committee of EU experts agreed to rejects all bids last week, because offers ranged from €800/t to €1,300/t only. The top offers were the lowest received since the Commission began to sell intervention stocks one year ago. The current EU price for SMP is €1,480/t, but a bid for 40t from intervention stocks was accepted at €1,390/t last month.
European Commissioner for Agriculture Phil Hogan told the Irish Farmers Journal Dairy Day event last month that “the product has to be sold”.
“At a time when the next EU budget is being negotiated, I cannot have half a million tonnes of SMP in intervention stores,” he added.
There is currently a total of 376,005t of SMP in EU intervention storage.
No fixed-price intervention next year
Meanwhile, a separate regulation proposed by the European Commission to remove the guaranteed intervention price next year has been progressing and is now expected to be submitted to EU agriculture ministers at their next Council in January. The volume of fixed-price intervention buy-in, usually 109,000t per year, would be set at zero for 2018 and a tender system would operate instead.
“The Commission, with a vote at the Committee for the Common Organisation of the Agricultural Markets, would decide on a case by case basis what volumes should be bought-in and at what buying-in price,” the text proposes.
Public intervention would clearly drift away from its objective of ensuring a fair standard of living for the agricultural community
The measure is based on the Commission’s assessment that while butterfat prices are set to remain high, “SMP will continue to be de facto a by-product with lower valorisation unless new outlets materialise”. This would leave SMP market prices under the €1,698/t intervention threshold and force the Commission to step in and buy the product from next March.
“Should this occur, while farmgate milk prices are at satisfactory levels, public intervention would clearly drift away from its objective of ensuring a fair standard of living for the agricultural community,” the Commission argues.
Even as milk supply increases in the EU, “raw milk prices paid to farmers are likely to stay in 2018 at a level which renders dairy farming remunerative, because of the current strong demand for butter and cheese despite the relatively low prices commanded by dairy protein”.
Commissioner Hogan told the Dairy Day event that EU member states had already agreed in principle to intervention operating under a tender system in 2018.
’Negative signal’
The IFA has described the proposal as worrying because “it would send a very negative signal to buyers as to the value of fresh as well as intervention SMP, and could further postpone a recovery in prices”, as well as setting a precedent for the future.
The ICMSA wants intervention to kick in automatically if farmgate prices fall below 30c/l.
Read more
SMP intervention tender proposal should be linked to milk price - ICMSA
Milk prices heading for a crash
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