Dairy farmers risk damage to market with oversupply
EUROPEAN Commissioner Phil Hogan has warned there is a real risk of oversupply in the European milk market as a result of high prices this year.
Mr Hogan was speaking following a meeting of European Agriculture Ministers – and said while last year was an excellent one, higher prices have encouraged higher production.
But he warned supplies of milk has “unsustainably increased” in some member states and singled out Ireland, Poland and Netherlands.
The commissioner also said he had noticed increased production in the larger countries France and Germany.
Mr Hogan also warned dairy farmers they have a “responsibility to look at the market signals and to heed them and to plan accordingly”.
“There is now a very clear risk of oversupply in the market in the EU in milk,” he said.
It comes at a time when Europe already has 350,000 tonnes of skimmed milk powder in storage – the EU’s method to remove excess milk supplies from the market and help keep a floor on milk prices.
Ireland’s milk production growth was amongst the highest in the EU at 9.4pc between January and November 2017.
It comes on the back of a dramatic increase of milk production in Ireland since the removal of milk quotas in 2015.
Mr Hogan’s warning comes as increasing numbers of farmers are choosing to switch to dairy farming, while existing producers continue to expand their herds.
Irish Creamery Milk Suppliers Association president Pat McCormack said oversupply is always a risk but it is too early at this stage of the year to predicting an oversupply situation.
“While volumes have increased and oversupply is a potential risk, there are a number of positive factors in the marketplace, including reduced production in New Zealand, two positive GDT auctions, increased oil prices which should stimulate demand.
“It is also important to point out that in volume, Germany and France showed the greatest increase in production in November 2017 (latest statistics from MMO) and not Ireland, Poland and the Netherlands.”
Dairy family farm incomes hit average record high of more than €90,000 last year, according to Teagasc figures.