Farm Ireland

Thursday 22 March 2018

First significant sale from EU’s giant milk powder stockpile - sources

'Situation in respect of existing stocks cannot be allowed to persist indefinitely' - Creed

No SMP has been put into intervention since September.
No SMP has been put into intervention since September.
Ciaran Moran

Ciaran Moran

It is understood that the first significant sale of milk powder from the EU’s giant intervention stockpile has been made this week.

Sources in Brussels have said that in this week’s tender 1864 tons of SMP was sold out of intervention at minimum price of €1190/t.

Between mid 2014 and the end of 2016 dairy markets experienced significant difficulties.

This was due to a combination of factors including increased global supply, the effects of the Russian ban on the import of EU agri-food products and reduced global demand, notably for dairy products in China.

During that phase of volatility, the EU Commission, responded to these difficulties through the deployment of support measures, including intervention provided for under the CAP

Key among these measures was the buying of skimmed milk powder (SMP) into intervention. Ireland's industry placed some 37,000 tonnes of product into intervention between September 2015 and the end of 2016.

There are now approximately 376,000 tonnes of SMP in public intervention stocks, effectively overhanging the EU SMP market.

In response to parlimenary questions this week, the Minsiter for Agriculture Michael Creed said his Department engaged with the Commission on recent proposals to limit further piling up of SMP in 2018.

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He said this included requesting that the Commission's proposal to reduce the fixed price ceiling to zero be specified as for 2018 only, to avoid setting a precedent for the longer term.

“I have previously stated that it is important that the Commission remain vigilant in monitoring the market situation, and has contingencies in place in the event of market volatility re-emerging.

“In common with the vast majority of EU Member States where dairy production is of significance within the broader agri-food sector, Ireland recognises that the current situation in respect of existing stocks cannot be allowed to persist indefinitely.

“However, the issue of current stocks cannot be disentangled from the issue of managing SMP intervention in 2018 and beyond.

"The issues involved, with respect to both market management and sentiment in the sector, are complex and require ongoing careful management.

“It is critically important that the release of these stocks is managed in a way that does not de-stabilise the market.

“I am satisfied to date that the Commission has managed these stocks in a prudent manner,” the Minsiter said.

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