On Wednesday, the Irish Government formally announced a €200m scheme of credit and grant supports for Irish industry.
Unfortunately, this scheme effectively excludes the Irish food processing industry and thereby Irish farmers, because it is effectively confined to SMEs only.
To be very clear, all Irish milk and 97% of the livestock sold off farms in Ireland is processed in the first instance by what are categorised as large companies under EU rules.
Therefore, as was the case and still is in regard to Brexit responses, any support measure which is confined to SMEs only effectively excludes Irish farmers.
Challenge
As set out previously, the challenge for Irish agri business is that in supporting off-farm supply and continuing to process and manufacture, the industry is feeding the nation with about 10% of this output while building up a very significant stock of products for which outlets are either closed off currently or pushed out even to early 2021.
This cannot continue without Government underwriting of extended credit requirements and export credit insurance.
So, unless Government banking finance or credit measures are extended to large companies, the agricultural sector and its processing arms will grind to a halt.
There is very clearly a positive response which the European Commission can send right now to all farmers
A 'complimentary/supportive' part of the current challenge is for the EU, through a common agricultural policy initiative, to introduce meaningful supports.
There is very clearly a positive response which the European Commission can send right now to all farmers and consumers alike, including international buyers of EU produce, that can signal that the EU agri markets will be supported on a whatever-it-takes basis.
EU member states, and indeed the European Commission, continue to battle the huge public health challenge of the COVID-19 pandemic while also providing emergency economic health supports in an unprecedented fashion, including governments and member states actually paying private sector salaries.
Severe disruption
In that context, while the agriculture and food sectors have experienced severe disruption in the close-down of the food service sector, relatively speaking, the Irish agri food industry, fingers crossed, has been coping with the overall supply challenge created by the virus constraints as processors and suppliers implement rigorous business continuity programmes.
In that context, the non-reaction from the EU Commission to the needs for PSA and other supports across the agri food sector suggests a response that is out of touch with the realities of the pandemic and out of step with the whatever-it-takes approach enunciated by the president of the European Commission and indeed all political figures across member states.
The fact that the European Commission introduced a whole series of support measures as recently in 2016 in the dairy sector makes this non -response even more jarring.
Inertia
Moreover this inertia and inactivity is out of step with the immediacy of the well-documented collapse in food service demand as restaurants, bars, cafes, etc, shut up shop under Government instruction across the European Union.
The dramatic absence of support measures from DG Agri is also out of sync with the Commission's dramatic response to member state demands, for example, for EU state aid constraints on export credit insurance schemes to be lifted as demand from third countries for Irish and EU dairy/agri products is paused if not postponed.
A belated attempt to intervene to turn around rapidly falling prices will incur a great deal more expenditure
It seems perverse that, individually, member states are acting effectively to meet their citizens' needs and yet, in agriculture where there is a pan-European policy capability, nothing is happening.
Perversely, not only is this laissez-faire do-nothing approach likely to result in unnecessary hardship at farm and food industry employment levels, ultimately a belated attempt to intervene to turn around rapidly falling prices will incur a great deal more expenditure.
In a purely Irish context, there needs to be a quick and profound realisation that for the agri food sector to continue to operate, large-scale credit finance, including export credit insurance to large companies, is announced immediately.
At EU level, there is very clearly a positive response which the European Commission can send right now to all that can signal that the EU agri markets will be supported on a whatever-it-takes basis.
The huge upside of this approach is that it can reassure all of those selling, buying or processing agri output in Ireland, and indeed across the EU, that measures to even out the disconnect between supply and demand will be managed.
The other huge upside is that the announcement of a comprehensive support scheme now would mean the European Commission saves millions and billions of euros in not having to buy and store surplus product at non-economic prices. There is no downside!
Dairy supports
Intervention prices
Butter 2463.9/tonne up to 50,000t.SMP 1698 euro 109 000 tonne limit. Combined price =21 cent litre equivalent ex farm. The measures introduced in 2016 are probably the best guide to how the EU will proceed.
Overall approach will be to avoid public buying/intervention if possible and promote private storage and eventually to agree a supply reduction scheme.The supply reduction scheme was agreed by August/Sept 2016 it might be earlier this year.In this mix, there will be pressure to extend the 1,090,000t limit for SMP intervention, but PSA will be favoured.PSA for SMP had not really been used before 2016, but given it means the Commission only pays storage, it was amended and adapted to a quick-in-quick-out format.The terms and conditions for PSA are: minimum storage is 90 days to maximum 210 days.
When/if PSA is introduced, there will be a lot of pressure to ensure the PSA aid is as high as possible so tenders are accepted at indicative prices to avoid downward spiral.
Notwithstanding the build-up of pressure from farmers and the emergency nature of the COVID-19 situation, the Commission actions may be guided by the price information for the EU database.
The raw milk price is to end January.
Whereas farmers and member states will argue that early intervention will prevent price falls.
On Wednesday, the Irish Government formally announced a €200m scheme of credit and grant supports for Irish industry.
Unfortunately, this scheme effectively excludes the Irish food processing industry and thereby Irish farmers, because it is effectively confined to SMEs only.
To be very clear, all Irish milk and 97% of the livestock sold off farms in Ireland is processed in the first instance by what are categorised as large companies under EU rules.
Therefore, as was the case and still is in regard to Brexit responses, any support measure which is confined to SMEs only effectively excludes Irish farmers.
Challenge
As set out previously, the challenge for Irish agri business is that in supporting off-farm supply and continuing to process and manufacture, the industry is feeding the nation with about 10% of this output while building up a very significant stock of products for which outlets are either closed off currently or pushed out even to early 2021.
This cannot continue without Government underwriting of extended credit requirements and export credit insurance.
So, unless Government banking finance or credit measures are extended to large companies, the agricultural sector and its processing arms will grind to a halt.
There is very clearly a positive response which the European Commission can send right now to all farmers
A 'complimentary/supportive' part of the current challenge is for the EU, through a common agricultural policy initiative, to introduce meaningful supports.
There is very clearly a positive response which the European Commission can send right now to all farmers and consumers alike, including international buyers of EU produce, that can signal that the EU agri markets will be supported on a whatever-it-takes basis.
EU member states, and indeed the European Commission, continue to battle the huge public health challenge of the COVID-19 pandemic while also providing emergency economic health supports in an unprecedented fashion, including governments and member states actually paying private sector salaries.
Severe disruption
In that context, while the agriculture and food sectors have experienced severe disruption in the close-down of the food service sector, relatively speaking, the Irish agri food industry, fingers crossed, has been coping with the overall supply challenge created by the virus constraints as processors and suppliers implement rigorous business continuity programmes.
In that context, the non-reaction from the EU Commission to the needs for PSA and other supports across the agri food sector suggests a response that is out of touch with the realities of the pandemic and out of step with the whatever-it-takes approach enunciated by the president of the European Commission and indeed all political figures across member states.
The fact that the European Commission introduced a whole series of support measures as recently in 2016 in the dairy sector makes this non -response even more jarring.
Inertia
Moreover this inertia and inactivity is out of step with the immediacy of the well-documented collapse in food service demand as restaurants, bars, cafes, etc, shut up shop under Government instruction across the European Union.
The dramatic absence of support measures from DG Agri is also out of sync with the Commission's dramatic response to member state demands, for example, for EU state aid constraints on export credit insurance schemes to be lifted as demand from third countries for Irish and EU dairy/agri products is paused if not postponed.
A belated attempt to intervene to turn around rapidly falling prices will incur a great deal more expenditure
It seems perverse that, individually, member states are acting effectively to meet their citizens' needs and yet, in agriculture where there is a pan-European policy capability, nothing is happening.
Perversely, not only is this laissez-faire do-nothing approach likely to result in unnecessary hardship at farm and food industry employment levels, ultimately a belated attempt to intervene to turn around rapidly falling prices will incur a great deal more expenditure.
In a purely Irish context, there needs to be a quick and profound realisation that for the agri food sector to continue to operate, large-scale credit finance, including export credit insurance to large companies, is announced immediately.
At EU level, there is very clearly a positive response which the European Commission can send right now to all that can signal that the EU agri markets will be supported on a whatever-it-takes basis.
The huge upside of this approach is that it can reassure all of those selling, buying or processing agri output in Ireland, and indeed across the EU, that measures to even out the disconnect between supply and demand will be managed.
The other huge upside is that the announcement of a comprehensive support scheme now would mean the European Commission saves millions and billions of euros in not having to buy and store surplus product at non-economic prices. There is no downside!
Dairy supports
Intervention prices
Butter 2463.9/tonne up to 50,000t.SMP 1698 euro 109 000 tonne limit. Combined price =21 cent litre equivalent ex farm. The measures introduced in 2016 are probably the best guide to how the EU will proceed.
Overall approach will be to avoid public buying/intervention if possible and promote private storage and eventually to agree a supply reduction scheme.The supply reduction scheme was agreed by August/Sept 2016 it might be earlier this year.In this mix, there will be pressure to extend the 1,090,000t limit for SMP intervention, but PSA will be favoured.PSA for SMP had not really been used before 2016, but given it means the Commission only pays storage, it was amended and adapted to a quick-in-quick-out format.The terms and conditions for PSA are: minimum storage is 90 days to maximum 210 days.
When/if PSA is introduced, there will be a lot of pressure to ensure the PSA aid is as high as possible so tenders are accepted at indicative prices to avoid downward spiral.
Notwithstanding the build-up of pressure from farmers and the emergency nature of the COVID-19 situation, the Commission actions may be guided by the price information for the EU database.
The raw milk price is to end January.
Whereas farmers and member states will argue that early intervention will prevent price falls.
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