Intervention proposals a threat to milk price safety net: ICMSA
Proposals to fundamentally change the intervention pricing structure for dairy commodities have provoked strong criticism from the ICMSA.
The EU Commission has proposed that the fixed price for intervention buying of skim milk powder (SMP) be adjusted when the support scheme re-opens in March next year.
It has been suggested that SMP would enter intervention via a tender process after 109,000t of product was purchased at fixed prices.
However, the proposal has been rejected by the ICMSA who claimed that such a move could undermine "very significantly" the floor price offered by intervention should the market for dairy products come under pressure.
"If this proposal is agreed, it would effectively mean that the current safety net price would be removed. When the 2009 crisis hit, and again in 2016, it was this fixed intervention price that put a floor under milk prices across Europe," said ICMSA's Ger Quain.
"A tendering process provides no such guarantees during an extremely vulnerable period for farmers when the problem of excess volatility has in no way been addressed," he added.
Milk prices this year have been underpinned by the buoyant trade for butter. In contrast, world markets for SMP have remained extremely sluggish, with product trading below the intervention price of €1,690/t.
The SMP market has been further undermined by the overhang of almost 380,000t of product in intervention stores.