May 172016

Having considered ICOS arguments rejecting the idea of a voluntary supply reduction scheme, the President of ICMSA, John Comer, said that the onus was then firmly on ICOS to spell out its policy to increase milk prices.

In relation to the points raised by ICOS regarding a voluntary supply reduction scheme, Mr Comer said he would make the following points:

  • To suggest the solution might lie in Ireland introducing a voluntary scheme is nonsense and ICMSA is emphatically not suggesting this.   What ICMSA is saying is that a scheme should be introduced in Ireland and in all EU member states and we clearly stated this.   The current crisis requires an EU-wide response and no individual member state will solve it.
  • In relation to the ICOS argument that EU farmers deciding to reduce production under the scheme would not impact on the market, ICMSA would merely point out that this ignores the basic laws of economics on supply and demand: If supply is reduced the market has to re-balance and milk price has to rise as supplies tighten. This is elemental.
  • In relation to the funding of the scheme, ICMSA believes we (that is, farmer-suppliers) are in a crisis and the measures taken by the EU to date simply have not worked.   ICMSA has clearly stated that EU funding should be made available for this initiative and we never suggested that Co-ops should fund such a proposal.   There is EU funding available and ICMSA believes that additional EU funding should be made available to take account of the impact of the Russian ban which resulted from an EU decision and which has had a severe impact on the EU dairy sector. No-one – certainly not ICMSA – ever suggested Co-op funding of a Voluntary Reduction Scheme.  There are options in relation to EU funding and this need to be pursued.
  • In relation to reducing supply, a farmer deciding to bull less heifers relates to the 2017 milk year and has no impact on 2016 milk prices so we believe this to be irrelevant.  Milk production can be reduced in a number of ways including reduced meal feeding, culling problem cows and drying-off earlier which would have cows in a healthier condition for the 2017 milk year.  The scheme is voluntary and it would be up to each individual farmer to decide whether to cut back or produce additional milk.
  • To suggest that Irish farmers would have to withdraw from world markets is simply not correct given that, at present, intervention stores are filling up by the day with no market for this produce above the intervention price.  The reality is that both NZ and US are under enormous pressure and the implicit ICOS suggestion that they will supply product at 20 cpl and increase production at this price to take our markets is, frankly, very doubtful.   What markets are ICOS talking about?
  • On the question of farmer investment in processing capacity, ICMSA has met with many processors, not a single one has said that they are opposed to such a voluntary reduction scheme and most assured us that a small reduction in production would have very little or no impact on their business.  They did recognise, however, that market prices need to be addressed and are open to discussing the mechanism.
  • Finally, I wish to stress that this is voluntary scheme for farmers.   To be very clear, this means if I want to reduce my production due to low prices, I will receive a subsidy for doing so. But if I want to increase production in 2016 to any level then I am perfectly free to do so.

Dairy farmer-milk suppliers are in a crisis situation in dairy and the manifestly inadequate measures rolled-out so far have failed miserably to address the milk price collapse.  When the market improves, I firmly believe that Irish dairy farmers will be in a position to respond – but only if they are still in business.  The current crisis has gone on for far too long and the onus is on everyone to come forward with real, practical proposals that will restore milk prices quickly to levels that will enable our dairy farmers to emerge from this catastrophic price slump.

John Comer, 087-2057846

President, ICMSA.