Industry sources are speculating that between 20% and 25% of dairy farmers in Northern Ireland have applied for the EU milk production reduction scheme.
There is broad agreement that producers who have been impacted by TB or other animal related problems over the 12 months will have, almost certainly submitted an application.
Other producers would have looked at the scheme as a form of insurance policy.
It is still too early to confirm what volumes have been committed by local dairy farmers. This is because all forms were submitted directly to the Rural Payments’ Agency in England.
Meanwhile, Holstein UK’s John Martin has responded to last week’s announcement by Dale Farm that it will pay a three-month winter bonus this year.
It will also include an additional top-up for year-on-year incremental production increases, covering the period October to December 2016.
“We welcome any price rise to dairy farmers. However, we are somewhat confused at processors now seeking to incentivise additional litres at a time when Europe is oversupplied and compensating for reductions,” he said.
“The aim of the PR scheme is to reduce supply to increase price and the Dale Farm offer is only the equivalent of 0.2ppl extra when spread across all of the milk, based on a 5% increase. If processors want security of supply to meet market requirements then a sustainable milk price will deliver it.”
Mr Martin continued: “Rather than adopting a negative stance to less milk being produced, milk processors should be using the reduced supply to their advantage and harder sell their product.
“In a completely opposite stance to Dale Farm, one of the EU’s largest milk processors, Friesland Campina, has launched an additional €10c/l for producers who reduce supplies for a six-month period from October 2016 to March 2017. The co-op has made available €15m to fund this additional measure, albeit with a dual aim of reducing phosphate production on farms.”
Mr Martin also pointed out that, as a result of the drive for more milk from the Industry, farmers invested, some more heavily than others, to provide a product for processors to expand both their output and profits.
He added: “As a result of the prolonged, depressed milk price many farmers have reached a ceiling of borrowing and are having to keep their business afloat by various means such as utilising private funds, re financing equipment, interest only loans and deliberately halting essential maintenance and repair. All these measures are unacceptable and unfortunately they mask the true cost of this crisis.
“EU production is in decline as we progress through 2016 however the European Milk Marketing Observatory has forecast that overall production in 2016 will remain 1% up on 2015 which in turn was up 2.5%.”
“The purpose of the production reduction scheme outlined by EU Farm Commissioner Hogan is to empower farmers to have some small element of control over the price that is paid by processors. Some processor’s will use any means possible to resist a more equal partnership and we believe it is the Governments responsibility to ensure fair play.”
Mr Martin continued: “A 5% reduction in supply during the period January to-March 2017, using 2016 as a reference period, will equate to production in 2015, a year when some processors used Intervention extensively.
“If milk prices recover slightly and flat line as we believe will happen without further supply controls, then many producers will exit the industry.
“These farms historically do not return to milk production for at least a generation. Those dairy farmers who can remain in business will be restricted from further growth due to the lack of financial resource to do so. The end result will be significantly less milk produced than the 5% we are proposing.”
The past week has seen an excellent turnout of members for Dale Farm’s two producer meetings.
“There were 140 members in Clogher with a further 200 producers at the meeting in Ballymena,” a Dale Farm spokesperson said.
“We appreciate that over the last two years our members have endured the worst ever dairy crisis, and we have introduced some incentives to help. At the meetings there was strong backing for the extended Winter Premium, which this year includes milk produced during the month of December for the first time. There was also a lot of interest in the recently announced Dale Farm Milk Production Incentive, which pays a bonus of 4.0ppl for additional milk supplies produced from October to December 2016 versus the same period in 2015.
“Dale Farm have made significant investments in our milk processing capability over recent years and the additional milk will help fill this capacity in the winter enabling us to pay the best possible milk price to our members.
Dale Farm will host two further member meetings next week: in the Glenavon House Hotel, Cookstown on Tuesday and the La Mon Hotel, Castlereagh on Thursday.