In­ter­ven­tion pro­pos­als a threat to milk price safety net: ICMSA

Irish Independent - Farming - - NEWS -

PRO­POS­ALS to fun­da­men­tally change the in­ter­ven­tion pric­ing struc­ture for dairy com­modi­ties have pro­voked strong crit­i­cism from the ICMSA.

The EU Com­mis­sion has pro­posed that the fixed price for in­ter­ven­tion buy­ing of skim milk pow­der (SMP) be ad­justed when the sup­port scheme re-opens in March next year.

It has been sug­gested that SMP would en­ter in­ter­ven­tion via a ten­der process af­ter 109,000t of prod­uct was pur­chased at fixed prices.

How­ever, the pro­posal has been re­jected by the ICMSA who claimed that such a move could un­der­mine “very sig­nif­i­cantly” the floor price of­fered by in­ter­ven­tion should the mar­ket for dairy prod­ucts come un­der pres­sure.

“If this pro­posal is agreed, it would ef­fec­tively mean that the cur­rent safety net price would be re­moved. When the 2009 cri­sis hit, and again in 2016, it was this fixed in­ter­ven­tion price that put a floor un­der milk prices across Europe,” said ICMSA’s Ger Quain.

“A ten­der­ing process pro­vides no such guar­an­tees dur­ing an ex­tremely vul­ner­a­ble pe­riod for farm­ers when the prob­lem of ex­cess volatil­ity has in no way been ad­dressed,” he added.

Milk prices this year have been un­der­pinned by the buoy­ant trade for but­ter. In con­trast, world mar­kets for SMP have re­mained ex­tremely slug­gish, with prod­uct trad­ing be­low the in­ter­ven­tion price of €1,690/t.

The SMP mar­ket has been fur­ther un­der­mined by the over­hang of al­most 380,000t of prod­uct in in­ter­ven­tion stores.

But­ter sup­plies

The weak­ness of the SMP trade was il­lus­trated by last month’s in­ter­ven­tion sale where there was just one of­fer for 40t of prod­uct at 6pc be­low the in­ter­ven­tion price. It was re­jected by all coun­tries.

Mr Quain de­scribed the Com­mis­sion’s pro­posed in­ter­ven­tion mech­a­nism as “risky” and urged the Min­is­ter for Agri­cul­ture Michael Creed to op­pose the planned changes.

Mean­while, but­ter sup­plies on the con­ti­nent re­main tight, with su­per­mar­kets strug­gling to pur­chase suf­fi­cient stocks and crois­sant pro­duc­tion in France cur­tailed as a con­se­quence. Last week but­ter hit a record price of €6/ kg in French su­per­mar­kets, with the coun­try’s agri­cul­ture min­is­ter, Stephane Travert, forced to play down sug­ges­tions that the short­age could soon be­come acute.

He urged re­tail­ers and sup­pli­ers to agree price ad­just­ments in or­der to main­tain de­liv­er­ies. De­spite the price hikes at re­tailer lev­els, whole­sale but­ter prices are on the slide with spot prices on the Dutch mar­ket back to €5,200/t, down from a high of €6,980/t in mid-Septem­ber.

In other dairy news, milk pro­duc­tion pow­ered ahead in Septem­ber, with sup­plies up 10.5pc on 2016 lev­els to al­most 650 mil­lion litres.

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