Reviewing intervention would send a clear signal to the market – Nicholson

Jim Nicholson MEP
Jim Nicholson MEP

Ulster Unionist MEP Jim Nicholson has said that a review of the dairy intervention levels would send a clear signal to the market and help to stabilise prices.

Commenting Mr Nicholson said: “The result of this week’s Fonterra Global Dairy Trade auction was a 9.3% fall in the overall price index – the tenth fall in a row.

“This result has prompted several New Zealand farmers and politicians to ask publicly whether the auction should be temporarily suspended – they fear it is helping to make a bad situation worse. Fonterra has rejected this accusation saying that the auction is not driving prices downwards but that it reflects the realities of an over-supplied global market.

“Markets quickly react to information and events, this debate highlights that in our globalised internet age dairy markets are now no different to energy, banking or pharmaceuticals in this respect, responding to a range of signals from the oil price to weather events on the other side of the globe almost immediately.

“There are a number of lessons from this debate in New Zealand regarding market signals which are relevant to the EU dairy sector in my opinion. Firstly, the European Commission should urgently send a clear signal to the market that it is supporting dairy by reviewing, and ultimately increasing, the intervention levels. This would send a powerful message to buyers who are holding back waiting for markets to fall further.”

Mr Nicholson said that in his view there are funds available to assist the sector and called again for superlevy fines – which have been collected from the dairy industry and amount to an estimated €860 million for 2014/2015 – to be retained to help farmers instead of the money being diverted to other aspects of the Commission’s work.

He continued: “Secondly there is no doubt that the results of the Fonterra auction are a powerful influence on the sentiment of buyers and the global dairy market. New Zealand is indeed a major force in global dairy markets but the EU is too – producing 20% of the world’s milk.

“The European Commission’s Milk Market Observatory (MMO) does not, however, reflect this reality, it takes too long to get market information to processors and producers. The MMO must be made more user friendly, it must send clearer, more up-to-date signals to the industry locally. This would assist decision making at both farm and processor level.

“Making the MMO more effective and robust would also highlight the importance of the EU’s dairy industry globally which would in turn help to counteract the influence of the Fonterra auction on markets.

“I believe that these are two simple steps the Commission can take to assist dairy farmers and processors – the industry cannot wait any longer for action.”