Dairy fears grow amid intervention releases
The EU Commission is to start releasing intervention stocks of butter and skim milk powder (SMP) next week.
The move, which has received a mixed reaction from the dairy sector, was given the green light last week.
Tenders for purchase of stocks must be lodged by next Tuesday and they will then be assessed by the Dairy Management Committee the following Thursday.
A Commission statement said the price and quantities to be accepted after each tender will be fixed by the management committee, taking into account the market situation at the time. Accepted tenders can be used for any purposes within and outside the Union.
There is currently 76,000t of butter in intervention stocks. However, as 51,000t is committed to the deprived persons scheme, just 25,000t are available to be released.
In contrast, 257,000t of SMP is held in intervention. Of this, 65,000t is committed to the deprived persons scheme, with the remaining 192,000t available for release.
However, only SMP stocks which were put into intervention before May 1 last year can be tendered for release at this stage. It is estimated that this equates to around 65,000t.
Commission sources said the decision to release intervention stocks followed requests from several member states and end users of dairy stocks.
Overheating
It is understood that the EU's Dairy High Level Group also requested that intervention stocks be used in a strategic way also to avoid overheating of the dairy markets.
Butter prices on international markets have increased to €3,500/t over the past few months, while SMP is now trading at close to €2,500/t.
While processors said they were "comfortable" with the release of butter stocks, the industry is not so sure that allowing more SMP on to the market is a good idea.
"We don't want a situation where a lot of skim comes out and deadens the market," one commentator said.
The ICMSA has expressed concern that the recent recovery in dairy markets could be undermined by the release.
Pat McCormack, chairman of the ICMSA dairy committee, said the move was "premature and ill-considered".
He said the recovery is still far too tentative to consider the release of stocks over and above what was agreed under the Deprived Persons Scheme. The risks of tipping the price downwards are still far too real, claimed Mr McCormack.
IFA dairy committee chairman Kevin Kiersey said the decision to release intervention stocks should not slow down the necessary and fully justified milk price increases that co-ops must pass back to hard-pressed producers.
He said dairy markets are extremely buoyant, with very tight supplies at European and international level, and strong export demand.
"The proposed release of up to 25,000t of butter and 60,000t of SMP, if priced correctly and handled carefully by the commission in the forthcoming early June adjudication, need not disrupt the market in any significant way," he said.
"Through COPA, the European Farmers' Association, and the Dairy Forum discussions we have with the Department of Agriculture, we have conveyed this message very clearly to the EU Commission," he added.
- Declan O'Brien
Irish Independent
