Farm Ireland

Saturday 22 October 2016

Risk insurance programme protects US farmers from 'catastrophic' dips

Published 11/05/2016 | 02:30

Thousands of demonstrators protest against the planned Transatlantic Trade and Investment Partnership in Hannover. Photo: AP
Thousands of demonstrators protest against the planned Transatlantic Trade and Investment Partnership in Hannover. Photo: AP

Irish dairy farmers have been urged to turn State-side to see volatility measures at work.

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Even though US milk producers haven't felt the extent of the pain of European and New Zealand farmers in recent months due to the low grain prices, they still have a risk insurance programme in action to help protect against the worst troughs.

Jim Mulhern, chief executive of the US National Milk Producers Federation (NMPF), said the dairy margin insurance programme was introduced in the US under a Farm Bill following the lows of 2008/2009.

"Prices were so low at that time they forced a lot of farmers out of business and washed billions of dollars off the balance sheet," he said.

"We developed a risk insurance programme that allows farmers to buy supplemental coverage from the government to protect them if prices drop below a certain level."

Mr Mulhern, who was addressing a volatility conference staged by the Ulster Farmers Union and Dairy UK, said it was not designed to enhance income or to interfere in the markets by encouraging production.

It is designed to protect the margin between the cost of feed and milk price.

"What we call the basic level, or the catastrophic level of coverage would kick in at US 9c/kg and farmers can buy coverage up to 18c/kg," he said. The cost increases as you buy higher coverage. He said it was designed to take the "bottom off of a trough" and the sign up was high in 2015.

"It is a voluntary programme," he said. "You can just take the market price if you want.

He said payments were not triggered in 2015 and were unlikely to be in 2016 as farmers were not near the level of the "2009 scenario" that saw prices on the floor.

He pointed out the prices are slightly better than Europe at an average of US$16 per hundred weight, with Europe's average at US$14 per hundredweight.

He pointed out production growth in the US was up 1.5pc, which he felt was sustainable.


The Transatlantic Trade and Investment Partnership (TTIP) discussions between the EU and US to hammer out a trade agreement have proved controversial across Europe.

It has been claimed leaked documents from Greenpeace show TTIP could lower standards in the EU by pressuring it to accept looser regulations on GM foods or harmful pesticides.

However, this has been disputed by the EU Commission, which says it will not lower the level of protection for consumers or the environment. It led to widespread opposition in France. Currently, the agri-trade to the US from the EU amounts to around €15bn, while imports amount to around €8bn.

Experts have highlighted differences between the industries with genetically modified organisms (GMOs) permitted State-side and the use of growth hormones in meat.

Mr Mulhern said the US dairy body was in favour of a TTIP agreement that would improve trade on both side of the Atlantic.

"We haven't seen progress in agriculture or dairy that would provide that agreement," he said

He said they were seeking an agreement that creates fair trade between both markets in dairy. "The reality it that it is a one way street with EU products pouring into the US," he said.

As part of the agreement the EU is demanding that the US recognise and protect the EU's list of geographical indications (GIs), these apply to foods registered as coming from a certain region in the EU, such as Feta cheese be recognised as a Greek product.

However, Mr Mulhern said the GI issue "adds grave insult" to US industry and they would not support an agreement with them in it. He said they considered the likes of Feta to be a common food name. Mr Mulhern said this type of deal would not pass in the US Congress.

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