MMO provides encouraging figures

Milk: Market sentiment yet to be reflected in producer prices however

The latest figures from the European Commission’s Milk Market Observatory (MMO) suggest dairy commodity markets may be stabilising.

It has reported prices as flat, but has warned that this more positive market sentiment is not yet feeding through to producer prices.

These were 1.6% down on the May figure in June, and average prices are now around 20% below the five-year average.

The commission has admitted a ‘supply side correction’ is needed and is hopeful its 150 million dairy supply reduction plan might help.

However it is more likely that the European market will gain in the late autumn from reduced global supplies.

In the UK, the post-Brexit weakening of sterling should increase milk prices by around two pence a litre over the coming months.

The European Commission has appointed a tough pro-EU commissioner and former French farm minister, Michel Barnier, as the person responsible for negotiating with the UK its exit from the EU.

He is likely to be uncompromising in his attitude, and will be well aware of the likely reaction of French and other farmers in the remaining 27 member states if Brussels is over-generous to the UK about access to the single market.

Meanwhile the UK will not take up its rotating EU presidency next July, confirming that the Government has chosen to opt out of all discussions on future EU policy.

This was decided by Prime Minister Theresa May and it underlines that from now to the Brexit date the UK will be a member of the EU in name only.

The single market is held up as one of the achievements of the EU – and it was one whose creation was driven by the UK.

However in a direct challenge to that single market, France is introducing compulsory country of origin labelling for some key products, including milk.

This has been challenged by a number of trade organisations, claiming that if the commission allows this others will follow this lead and effectively end the single market in food.

Ireland already has a labelling scheme for milk produced and processed there.

France has also indicated this week that it will unveil a package of aid measures for cereal growers in regions hit by poor yields.