‘MEPs have spoken on dairy sector’

UFU annual meeting at Greenmount. Picture: Cliff Donaldson
UFU annual meeting at Greenmount. Picture: Cliff Donaldson

Ulster Unionist MEP Jim Nicholson has said that it is now time for the European Commission to take the additional steps needed to support the EU’s dairy farmers.

Mr Nicholson made his comments following the endorsement this week of his report on the dairy sector by MEPs.

He also welcomed that MEPs from across the EU have strongly supported his dairy report this week.

“The Parliament has spoken and an overwhelming majority of members have called for more to be done to support the dairy sector and assist farmers who are being hit hard by market volatility and tumbling farmgate prices. I am disappointed and frustrated that during the debate Commissioner Hogan continued to rule out reviewing the intervention levels.

“The European Commission must use all the tools at its disposal to support the dairy sector, current intervention prices are unrealistic and must be reviewed and increased to reflect actual production costs.

“The Milk Market Observatory (MMO) is not fit for purpose in its current form and I have called on the Commissioner to come forward with concrete proposals to ensure it communicates prices and market analysis more effectively and sends clearer, more timely signals to the industry.

“I also firmly believe that superlevy money must not to be diverted to other areas of the Commission but should remain in agriculture to help strengthen the dairy industry so it is better equipped for the challenges and opportunities in the post quota era.”

Mr Nicholson continued: “The Commissioner continues to point to the positive prospects for the dairy sector in the longer term and insist that the existing measures to support the sector such as securing new markets are sufficient.

“The Commission has however failed to recognise the scale of the challenges currently facing dairy farmers. Northern Ireland farmers are receiving on average price of just over 20 pence per litre from processors, while the average cost of production is 26.5 pence per litre – this is clearly unsustainable.

“With no recovery expected until early 2016 at the earliest action is needed now as dairy farmers cannot wait until next year to see things improve.”

He concluded: “I warned the Commissioner to learn the lessons of the past – leaving it too late to act will mean that farmers and the entire dairy supply chain may not be in a position to take advantage of the longer term opportunities. I will continue to keep the pressure up on the Commission, it is important that National and Regional governments also play their part in persuading the Commission to take more meaningful action.

“This week MEPs have clearly called for more to be done to support the dairy sector - the ball is now firmly in the Commission’s court.”

DUP MEP Diane Dodds said that during his visit Mr Hogan had highlighted that global over-supply of milk was the main cause of the price reduction and the impact is being felt in certain Member States. He also stated that the EU is predicted to increase milk production by 0.9% by the end of this year, reiterating that global demand is set to grow by 2%.

She added: “The Commissioner was quick to point out he had been working hard to help the dairy industry by strengthening of the Milk Market Observatory, supporting the school milk scheme, and through investing in EU promotion policies and risk management tools.

“However he also claimed that increasing intervention prices would send the wrong message to the markets, and that in the long term the product would have to be released back onto the market. Unfortunately the Commissioner appears to be a slow learner on this issue.

“He needs to examine the success of the effective use of intervention back in 2009, when it put a bottom in the market by rebalancing supply and demand - and also made the Commission a lot of money.

“We are potentially facing a crisis of 2009 proportions yet the Commissioner continues in his failure to act. Recent figures released by the European Milk Market Observatory suggest that the EU 28 average price for raw milk between May 2014 to May 2015 was down 19%, with the Republic of Ireland down some 22%. In Northern Ireland the net producer price for August 2014 was 27.29ppl compared with May 15 when it was 21ppl. This represented a 23% decrease in prices, with more on the way.

“The Commissioner highlighted that there needs to be a change in mindset by farmers to produce in line with demand. This is extremely frustrating given that Commissioner and the Commission generally have repeatedly encouraged farmers to invest and develop to meet growing demand.

“The Commissioner is in a privileged position and has a strong case for acting to increase intervention prices and rebalance the market in line with previous Commission experience. We live in hope that he does it sooner rather than later.”

The Ulster Farmers’ Union says it welcomed backing for enhanced support for the dairy industry but says it is angry that the European Commission will still not acknowledge there is a crisis in the industry.

“Inevitably these are complex issues, but we were glad to see that many members of the committee understood the scale of the problem,” said UFU president, Ian Marshall.

“Like them we do not want to see supply controls – quotas – reintroduced to interfere with the free market when there is a crisis. But we do believe the price at which Brussels has to support the market must be more realistic than a figure set in 2003 and not reviewed since 2008,” he said.

Mr Marshall said the UFU, and farmers across Europe, would be frustrated to see again that the farm commissioner, Phil Hogan, used an appearance at the committee to insist that increasing the intervention price would not be the answer.

“That might be acceptable if Mr Hogan was producing an alternative response but he is not. He has now been told by a majority of MEPs on the committee that they support a fresh look at intervention. Let’s hope he finds this pressure harder to resist than he has the message coming from the farming lobby that he is wrong to insist there is no crisis when dairy farmers’ incomes have plunged in every member state of the EU,” said Mr Marshall.

The UFU president added that a further frustration for the UFU was that it has submitted to Brussels a report setting out the case for increased intervention support, which had been ignored by the commissioner along with the views of other farm lobby organisations across the EU.