The global supply/demand balance remains positive, processors are expected to deliver healthy profits this year and the talking down of milk prices is not justified, ICMSA president John Comer has said.
Speaking at the ICMSA AGM in Limerick on Monday and making his final speech as president of the association, Comer said that the talking down of milk prices will not work.
Comer said that from a milk perspective, 2017 has been a positive year, with prices improving throughout the year, but weather conditions in the second half of the year impacted negatively and will continue to pose challenges into 2018.
“While markets have softened in recent weeks, we are starting 2018 in a positive place and I want to say that I am disappointed that our processors have already started the process of conditioning or softening up farmers for price reductions in 2018.
“Indeed, it is also high time that farmers saw an economic return from their participation in quality assurance schemes and we also need to see an economic return for our grass-based production system.
“Farmers in other countries are getting an additional return for grass milk and given our almost unique grass-based system in the EU, Irish farmers have every right to ask the simple question: where is our grass-based premium?
“We have a huge marketing tool in our grass-based system, but, certainly to date, we are failing to market this advantage.
“Despite improved prices, farmers recognise their vulnerability in the current markets and it is quite clear that the current toolbox of policies is totally insufficient to address farm income volatility and we now need to look at new innovative ways to support the family farms that are the economic and social lifeblood of rural Ireland.”
Family farm structures
Comer said that the association believes that Ireland is in danger of fatally undermining that family farm structure if we do not act.
“The ICMSA does not accept the line that the market sets your price – the market is rigged, and rigged markets have wiped out the family farm system in most other member states.
“Nor is scale the answer, because there’s only so much work that one individual can do.”
The market is being abused by large processors and retailers and it needs to be fixed by our regulators
“Farmers are regulated almost out the gate at this stage, but the powerful links further along the chain appear to be able to set their own agenda backwards to the farm and forwards to the consumer with no interference whatsoever from either our Government or the EU.
“The ICMSA welcomes the focus on this long-standing scandal from Commissioner Hogan and we acknowledge his efforts, but it needs to be turned into concrete actions.
“The liquid milk market in Ireland is a clear example of what can go wrong: our very own processors – and we need to be very frank on this – have destroyed a sector by selling liquid milk to large retailers at unsustainably low prices and passing the hit back to their milk suppliers.
“That’s what happened and it cannot be allowed to happen in other sectors as well.
“The reluctance at official level to tackle the retail corporations must change and we must get serious on this matter in 2018.
“We produced milk below the cost of production for 2016. The farmer price fell by over 40%, while the consumer price at EU level fell by about 2%. Farmers’ margins were wiped out, while someone else along the supply chain gobbled them up. Farmers ended up supplying milk for a price below the cost of production while everyone else kept or increased theirs.
“Family farms are being ripped off by the extremely powerful elements further up the chain and this will have to stop and I regret to say that our very own processors are part of the problem.”
Unless appropriate policies are put in place to deal with volatility, ICMSA members – and it is the same for farmers in the tillage sector – will remain extremely exposed, he said.
“Our retailers and processors will all survive by passing the negative impacts back to the primary producer citing the need to keep prices to the consumer low, but it is kept low at our expense.
“Policy makers must return a level of power to the primary producer or we will end up completely at the mercy of these ruthless and all-powerful corporations.”
The outgoing president said that ICMSA believes that the Voluntary Milk Supply Reduction Scheme should be a permanent part of policy, triggered when milk price falls below 28c/l.
“We are concerned that the Government is listening too closely to the processing sector, which wants volumes at any cost, and not enough to the primary producer.”
What we are saying is this – give farmers that option when milk price is poor and put the pressure back on processors and retailers to return an improved price
“Stop giving them a free run at our expense.
“Commissioner Hogan took the right decision introducing this scheme and perhaps if he had taken it earlier – when ICMSA first proposed it – we wouldn’t have 360,000t of SMP in storage today.”
On Brexit, Comer said that it is still “top of the agenda”,’ as it was on this occasion last year.
“Is the situation any more clear than this time last year?
“I think I must be blunt on this issue: the Brexit negotiations to date have been nothing short of chaotic.
“People are playing politics and the reality is that it will be us – the farmers – who will be hit first and hardest unless the political mess is sorted out quickly.
“We are just 15 or 16 months from the Brexit date set out and, in our opinion, as a country, we are ill-prepared and unless action is taken quickly, and some key decisions taken, then we are facing a potential disaster.
“That’s been said before and I wonder whether hearing it repeatedly hasn’t made us a little complacent. But I’m going to make no apology for pointing out the scale of the disaster that’s facing Irish farming and food in the event of this present uncertainty continuing.
“It is fine to say that we are having trade missions to open up new markets – that work is welcome and important – but we’re going to have to be honest with people: opening and developing new markets takes time and there’s no possibility, none, that they will replace the UK market.
“This is a centuries-old food trade between us and the British. Our farming forefathers built that trade; they earned it and earned the trust and taste of British consumers.”
I am very afraid at this stage that Irish farmers are being sacrificed to the political agendas of both sides
“Despite all the robust talk from the EU regarding protecting Ireland’s interest, in my darker moments I fear that we could very easily be sacrificed for wider political reasons at EU level.
“Our Government needs to take immediate and direct action delivering decisions at EU level and then introducing additional measures at national level.
“At EU level, agreement on a transitional period is critical and this needs to be delivered promptly to sectors such as agri food if we’re to have any level of certainty for 2018.
“Decisions by dairy and beef processors will be taken shortly in relation to Brexit that will have a direct impact on farmers’ income in 2018 and beyond and an agreed transitional period is indispensable in this regard.”
Meanwhile, Comer expressed disappointment from a farmer perspective in relation to Budget 2018, particularly the complete lack of response to the Brexit challenge.
“Low interest loans, while welcome, are certainly not the solution and we needed to see real concrete measures introduced that address the twin threats of Brexit and income volatility.
“I will state very clearly that Budget 2019 is just too late for such decisions.”
Comer said that the uncertainty around farm payments post-Brexit is also a huge issue for farmers.
He said farmers’ BPS and Greening payments cannot be cut due to Brexit.
“For far too long, we’ve seen issues arise at EU or world level that were totally unrelated to farming, but somehow ended up with farmers paying a heavy price - the Russian ban being a case in point.
“This must stop, and I particularly welcome the Taoiseach’s commitment given to the ICMSA at a recent meeting that Ireland will increase its EU budget contribution post-Brexit in order to maintain the current CAP budget.
“This is a positive statement, but Ireland must now convince other member states to follow suit.”
On Mercosur, Comer said that come spring 2019, Ireland may need a new home for the 320,000t of beef that is currently sold to the UK.
“Why would the EU even contemplate offering at least 70,000t of beef to the Mercosur countries to conclude a deal?
“Many of the trade deals proposed by the EU are questionable, but to be seriously considering such a deal at present is just outright reckless.”
The Irish Government must up their game on this matter and we cannot allow ourselves to be rail-roaded on Mercusor
Comer said that “anyone here today can have a broken gutter on the farm and he/she will be penalised by our Department and EU – under the Mercosur terms he or she will be expected to compete with beef farming located in South America that is wholly without standards and so destructive of the environment that it is singled out as a global threat.”
“The contradictions here are simply mind-boggling and have to be resolved once and for all.
“The EU needs to take decisions based on the best interests of their citizens and the global environment – not big business.
“A Mercusor deal would be a deal for the big corporations and it must be denounced as simply out of the question.
“I also want to nail this delusion that Irish farming will benefit on the dairy side from Mercusor, which would cushion the beef hit.
“This is downright rubbish: we won’t and we don’t want to benefit on that basis.”
“The next review of the CAP is upon us and quite obviously, the budget is key.
“Brexit will leave a €3bn hole in the CAP and the ICMSA is very clearly stating that the remaining 27 member states must make good this loss.
“The ICMSA suspects that the EU wants to effectively wash its hands of its responsibility to support farmers during market crisis – we note that, along with sustainability, another of their bureaucratic buzz phrases is risk management.
“If maintaining the family farm structure as we know is the objective, the kind of strategy associated with risk management will simply not work.
“Ensuring farmers are protected during periods of market crisis must be a central objective of CAP, maintaining payments to active farmers and a real effort to remove unnecessary inspections and red tape must be the priorities.”
On the fodder situation, Comer said that the adverse weather conditions since July have taken a severe toll on many farmers, particularly in the northern and western half of the country, with some farmers in a very difficult position.
He said there needs to be a co-ordinated plan for fodder for areas facing a shortage and it has to be in place before Christmas.
Farm payments and inspections
“The Areas of Natural Constraint (ANC) scheme has played a central role in the past in retaining farmers in poorer areas of the country. I cannot over-emphasise the importance of this scheme to farmers and the current review is a major concern.
“Those farmers dependent on this payment need to be protected and areas excluded in the past need to be reviewed, with payments returning to pre-2009 levels.
“The additional €25m allocation under Budget 2018 is welcome and the ICMSA believes it should be used to restore some of the post-2009 cuts to all farmers in ANC areas.
“Farming in poorer land areas is extremely challenging and these farmers need to be supported.
“The Farmers Charter sets down commitments that must all be met, including GLAS payments which are now overdue.
“A Farmers Charter is a very necessary document, but it loses value if the commitments entered are not delivered upon and underlying principles are changed. That undermines the credibility of the whole process.”
With the nitrates regulations and nitrates derogation expected to be finalised next week, Comer said it is essential that the derogation is delivered with nearly 50% of dairy farmers now relying on it.
“The ICMSA believes that the scientific evidence supports its continuation, but there are genuine and practical concerns that farmers have in relation to new measures and the ICMSA will be insisting that the implementation of these measures will have to be practical at farm level.”
Comer said that as a sector, he believes Ireland is not doing enough to promote or highlight the many initiatives that farmers as a group and as individuals are carrying out to help combat climate change.
“While selected figures will be spun by vested interests, we have a good story to tell and I believe that Irish farming can and will play an even more positive role on climate change if given the opportunity.
“However, I am concerned that our sector could be unfairly targeted and recent illogical recommendations from the Citizens Assembly are a case in point where an unelected and unaccountable group received huge publicity for proposals that were, I believe, fundamentally misinformed and mistaken.
“The facts are that from a carbon perspective we are the best in the EU in producing milk and the fifth-best in producing beef.
“Global dairy demand is growing at 1.5% to 2% per annum.
“They must be fed and, thinking globally – which is what we are constantly encouraged to do – then we need to ask where this food should be produced, and Ireland is quite clearly one of the regions where additional milk production should be facilitated and not undermined.
“The current policy framework works against this reality and therefore must be re-examined.
“The issue of climate change will be dealt with by everyone working together under elected governments. That is the mandate and system that the ICMSA recognises and participates in.
“We will not allow the debate to be hijacked by quangos or unelected groups with grandiose names.
“Minister, the only citizens assembly that the ICMSA will pay attention to is called Dáil Éireann.”
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