Farm Ireland

Saturday 20 January 2018

European countries are back putting milk powder into intervention as prices slump

A host of EU Member States have returned to selling milk powder into intervention as prices continue to slide in 2016.

Last week saw skimmed milk powder (SMP) offered into intervention for the first time this year, with 1,201 tonnes put forward to date.

Both Poland and Lithuania offered around 470 tonnes each, with the remainder coming from Germany.

EU SMP prices have been dropping since the beginning of the year, with the average price sitting at €1,790/tonne for the week ending April 9, according to UK based AHDB.

It says while this is still €92/tonne above the intervention price but, with production rising towards its seasonal peak, some sellers have clearly seen intervention as their better option.

European Agriculture Commissioner, Phil Hogan says he won’t sell any of the EU’s giant stocks of skimmed milk powder in intervention until the ‘price is right’

It comes as all offers for the sixth tender of the stock are understood to have been rejected by the Commission last week.

Indeed, according to trade sources prices offered were lower than those offered for pervious tenders.

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Speaking to French dairy farmers late last week, Hogan said the 350,000t of SMP in public stores is equivalent to some 30pc of annual EU production.

He said releasing them on the market might disturb the improvement taking place. However, he also said keeping them in the stores also weighs on the market and prevents a healthy recovery.

“This shows that, in rugby terminology, public intervention is like an up-and-under kick: it momentarily removes the pressure, but does not make it disappear.

“I assure you that the Commission will act cautiously and prudently in returning these stocks to the market, always keeping our farmers' interest at heart.

“For the moment, we have refused all offers, which is a clear indication of our commitment not to disturb the market.

“And let me say very clearly that the Commission will not under any circumstances sell this product until such a time as the price is right.

“However, no matter how simple it sounds, the solution to public stocks is not to build them,” he said.

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