ICOS was invited by the European Court of Auditors to response to stakeholder consultation into the dairy market crisis in 2016 triggered by the Russian embargo.
Recognising the significant role played by public intervention, which provided a floor to the market, the submission calls for more effective tools in the future (e.g. calf milk replacer scheme) to ensure large volumes in public storage are managed out in a better manner as prices recover, especially when there is a disparity between fat and protein prices. ICOS acknowledged the importance of the direct aid provided to farmers provided by the EU during 2015 and 2016 including funding used to establish the agri-cashflow loan scheme and other cash flow supports such as advanced direct payments to farmers.
Commenting on the EU milk production reduction scheme, which resulted in a reduction of nearly 834,000 tonnes of milk with 48,000 farmers taking part (3,858 in Ireland). ICOS concluded that the data indicates that production across most of the EU had started to reduce well ahead of the introduction of the scheme and it is likely the case that money from the scheme would have gone to those who already reduced output and would have continued to do so. We are extremely sceptical as to whether supply management measures actually work, especially if a future measure was mandatory on farmers, as the European dairy sector operates and competes in global markets. Supply reduction in Europe only serves to reduce the competitiveness of the EU dairy sector. This was an international crisis and the market upturn since in 2017 was the result of an international rebalancing of supplies rather than a reduction in volume in the EU alone. ICOS also acknowledged the milk price support provided by Irish co-ops during the period, which exceeded €100 million in 2016. A copy of the submission can be viewed here
Eamonn Farrell – Agri Food Policy Executive
28 May 2021