The Deputy President of the ICMSA has said that the current period of falling milk price is inflicting a battering on the rural economy to the extent that he estimates a total drop in spend of “well in excess of €1 billion” compared to last year and he warned that current Government and EU policy complacency means that these kinds of enormous losses could continue into next year. Pat McCormack said that ICMSA was now working on county-by-county losses based on the volume of the milk produced in that county in 2014 at a price of 38.4 cents per litre and then calculating the same volume at a 2015 price of 28 cents per litre with the wider ‘county spend’ calculated on the basis of Professor Alan Mathews recommended multiplying factor of 1.7. Mr McCormack said that while no-one imagined that international dairy markets could be turned around at the click of a finger, he was becoming increasingly alarmed by what he termed the “sleepwalking attitude” being displayed by both the Department of Agriculture, Marine & Food and, even more so, by the EU Commission and he said that when the losses are presented on an individual county basis they become extremely alarming.
“ICMSA has always urged politicians and policymakers to grasp the basic fact that where farm incomes take the kind of battering that we’re seeing just now then not alone does the local economy suffer through falling farm income but – based on the well-established economic principle of the multiplier effect – you see massive falls in the wider local economy as the farmers stop purchasing goods and services in their local communities”, said Mr McCormack before going on to instance the estimated losses for some of the bigger milk producing counties.
“Based on very conservative calculations, we expect that just Cork – which accounts for a quarter of all the milk produced in the state – will see a drop in spending of in excess of €263 million through direct reduction in milk price and the multiplier effect that sees that milk price spent in local communities. Tipperary will see a fall of probably €111 million. Limerick will probably be down about €85 million. Kerry down by nearly €78 million and Kilkenny around €57 million. This isn’t ‘income-falling’ territory anymore, in many cases this is ‘income-disappearance’ for the milk suppliers with measurable and very destructive knock-ons for their local rural economies”, he said.
“What’s even more frustrating from an ICMSA point-of-view is the non-interference policy that seems to be order of the day as far as the Government and the EU Commission is concerned. They’ve called an Emergency Farm Council in four weeks time. What kind of emergency is that? We’re just seeing a kind of shoulder-shrugging and ‘shure they’ll come back up again – at some stage’ attitude and we don’t think that’s any kind of policy at all. Whatever happened to the value-added strategy being pursued by all our processors and Co-ops where we were going to see a move away from a basic commodity basis and onto a level that was far closer to the final retail price? Equally how do our politicians imagine that our critically important dairy primary producers can survive going forward on the basis of the kind of income volatility that can see a farm family’s income go up or down by €35,000 or €40,000 from year to year. We’re going to need help managing that kind of extreme volatility and that’s why we need to see local politicians of all parties get behind the kind of income-smoothing policies ICMSA is urging on the Government in the shape of their Farm Management Deposit Scheme modelled on the successful Australian Government’s income averaging tool”, concluded Mr McCormack.
Ends 13 August 2015
Pat McCormack, 087-7608958
Deputy President, ICMSA.
Cathal MacCarthy, 087-6168758
ICMSA Press Office