Moves to aid farmers as butter mountains return to EU

Dairy farmers gave a guarded welcome to EU moves to tackle the crisis that has seen the return of butter mountains in storage throughout Europe.

Less than one year after the much celebrated removal of milk quotas, Europe's dairy farmers are facing mounting losses on the back of tanking world prices.

EU Agriculture Commissioner Phil Hogan has doubled the intervention storage that is effectively acting as a dumping ground for surplus EU dairy product being sold off at rock-bottom prices.

In addition, Mr Hogan has sanctioned the option for EU states to help their dairy farmers through the current price slump to the tune of €15,000 each.

Milk prices at farm level are now 25c/l, down from 40c/l in 2014 when world milk markets were booming.

Since then, a combination of supply and demand issues have conspired to generate a huge surplus on international markets.

In a throwback to the massive over-production in the EEC in the 1980s, more than 63,000 tonnes of skimmed milk powder were sold into EU intervention stores in the first 10 weeks of 2016 at the loss-making price of 21c/l. This is 25pc lower than average cost of production on Irish farms, according to Teagasc.

Farm organisations such as the IFA said the announcement was a positive "first step".

"While some positive measures have been announced, further action is required to address the growing income crisis across all farming sectors," said the IFA's national chairman, Jer Bergin.

Slump

However, Minister for Agriculture Simon Coveney ruled out the possibility of Ireland subsidising its dairy farmers through the current price slump.

"We don't think supply controls are the appropriate response here," said Mr Coveney.

When asked if he felt that the Irish Government would be availing of the option to incentivise farmers to produce less, similar to the French authorities, Mr Coveney said it would not be happening in Ireland.

"I don't think Irish farmers want that. What we want is market intervention tools like storage aid intervention, more promotion, and progress on reducing or, on a temporary basis, abolishing import levies on fertilisers. We could reduce the cost of fertiliser for farmers in the EU by up to 14pc."