Waterford TD John Deasy says further urgent measures are needed to help relieve the income pressure on dairy farms.
Following the abolition of quotas just over a year ago, February CSO figures showed a 37% increase in production by the sector compared to 12 months previously.
“However, milk prices have fallen by 20% since February 2015 due to a combination of global factors, and Irish farmers, many of whom have invested significantly, are struggling to cover the cost of production,” Deasy says.
The average February milk price was 24.68c/litre — down from 30.77c/l (also incl. VAT) in March 2015. And short-term indicators look to be static.
With the imminent phased payment of superlevy fines for 2015 set to further impact farmers’ cashflow, Deputy Deasy contacted the Department of Agriculture to see if there was any scope to postpone these instalments for another 12 months in the hope that market conditions can improve.
Secretary General Aidan O’Driscoll informed him that Irish officials “pushed strongly” for a possible deferral to 2017-18 during discussions in the run-up to the March Council of Agriculture Ministers.
However, Brussels had “rejected” this prospect on legal and regulatory grounds.
“While we suggested alternative arrangements it was clear that the proposal enjoyed very little support from other Member States and therefore was not likely to succeed,” the Sec-Gen added.
That means the “optimum repayment model” agreed with farming groups and at government level — 10 equal instalments from May to September in 2016 and 2017 — will proceed as planned.
Nationally some 3,672 farmers (of the 6,109 who incurred the levy) availed of this penalty repayment option; amounting to €35.6m out of a total national levy liability of €71.2m.
The exchequer has already forwarded the money to the EU. It will be repaid by farmers on an interest-free basis by way of deductions from monthly milk cheques covering the peak months of April to August. Co-ops will in turn send these monies on to the Department.
Last week the IFA called on co-ops to desist from any more milk price cuts given the challenges faced at farm level. The industry is heavily represented on the new national dairy forum — a partnership which Fine Gael TDs Deasy and Michael Creed proposed in order to address post-quota uncertainties.
The need for meaningful, confidence-building measures to support a sustainable milk price is sure to be on the agenda when the incoming agriculture minister chairs the forum’s next session.
Following a recent visit by the Dáil Public Accounts Committee to Vietnam, additional resources have been sanctioned to market the Irish dairy sector in Southeast Asia.
Waterford TD John Deasy, who led the delegation, said: “The inescapable fact is that Vietnam needs to be immediately targeted by Bord Bia due to the ending of the quota regime.
“The European Commission will shortly finalise a free trade agreement with Vietnam and by extension gain access to 630 million consumers in the ASEAN group of countries.”
He added: “A good deal has happened since our return. Following conversations I’ve had with Simon Coveney, the Department of Public Expenditure and Reform has agreed to fund additional Bord Bia personnel in emerging markets.
“Based on the draft report we’ve been working on, a Bord Bia presence in Vietnam to specifically target food and dairy industry trade links has been agreed in principle. We’ve also been in contact with Bord Bia who support this measure.”
Mr Deasy said: “One criticism we heard was that all of our bets seems to be placed on China. At present Bord Bia’s staff in that part of the world is based in Shanghai, while Enterprise Ireland operates out of Singapore.
“If we want a greater piece of the export trade dominated by countries such as New Zealand and Holland then we need to put resources in place to carry out market analysis and promotion; creating awareness of our capacity to produce premium dairy goods, including infant milk formula for instance,” the Fine Gael deputy added.
“Our local dairy farmers in Waterford rely on Bord Bia to expand the global market in order to sell their produce. We need to spread the risk associated with the volatility across the dairy sector by entering new territories such as Vietnam and other emerging economies.”