Monday 26 September 2016

Dairy price slump set to continue for another six months

Martin Ryan

Published 02/12/2015 | 02:30

ICMSA president John Comer
ICMSA president John Comer

The 'collapse' in milk prices, which is estimated to have cost the rural economy up to €1bn in 2015, will continue in the first half of 2016, a national dairy leader has warned.

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ICMSA president, John Comer told the association's AGM in Limerick that the "losses will be greater in 2016", adding that dairy farmers are looking to the New Year with "absolute foreboding".

His comments follow a warning from Ornua's Joe Collins that the worldwide slump in dairy prices is unlikely to pick up until the second half of 2016.

Rabobank dairy analyst Kevin Bellamy anticipates a "substantial price recovery" midway through next year, with the expectation China will have worked through its stocks and be returning to the market.

Mr Comer last week reiterated the ICMSA's call for a policy change on the safety net of 28c/l. "The current toolbox of policies is totally insufficient to address the kind of farm income volatility that looks increasingly likely to become a feature of our working lives," he said.

Mr Comer said that "milk price has fallen by up to 40pc while retail prices have only fallen by 2pc at EU level" and farmers have been hammered by the links further along the supply chain that "bricked off" their own margins.

'Fixing'

He stressed farm input costs increased by 11.7pc between 2010 and 2015, with fertiliser prices up over 22pc and feed prices nearly 18pc higher.

However, he stressed that Irish milk prices declined by 22.7pc as he called for an EU investigation into alleged 'fixing' of fertiliser prices.

Meanwhile, EU Agriculture Commissioner, Phil Hogan, told the conference that any evidence of a cartel or price 'fixing' in the fertiliser industry should be provided to the EU for investigation

Mr Hogan said a new international agreement on climate change should be reached in Paris with important implications for the agriculture sector which contributes 10pc of the entire emissions in the EU, and even higher in Ireland.

Agriculture Minister Simon Coveney told the ICMSA conference that a case is being made that Ireland is the most efficient producer but it does not remove the responsibility for farmers to become better at controlling emissions.

He urged all farmers to sign up for a sustainability programme.

Mr Coveney added that agriculture and dairy farming in particular will have to take on the responsibility that goes with producing large volumes and expansion. Over 40pc of emissions are coming from agriculture and "this industry is going to be under the spotlight" within the EU.

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