There is deep concern over the rapid spread of COVID-19 and its impact on global dairy markets. Europe and the USA are now the epicentres of the global pandemic with economic activity severely affected. The OECD has warned that the COVID-19 outbreak could half global economic growth this year.
The full impact of the pandemic will be difficult to judge as we don’t know how long the lockdown on normal life will continue for in the short to medium term but its impact on the economy and business will be long lasting and significant.
The restrictions on daily life has brought the food service sector to a sudden halt with restaurants, coffee shops and pubs closed with elevated retail demand offsetting. However, increased retail demand is likely to be temporary as panic buying eases.
Problems have been identified with logistics, as there are not enough containers coming back from China and it is estimated that this will take a number of weeks before the situation comes back to normal. Countries across the globe moved rapidly to shut down their borders and economies to stem the tide of the virus. In a welcome move, the EU established “priority” or green lanes for the transport of goods through border checkpoints with food and livestock protected.
There is genuine apprehension related to the potential interruption to milk collection and processing should the spread of the virus worsen in Ireland affecting critical workers across the supply chain. These concerns are heightened as we enter into the peak supply months of May and June with little spare capacity available. The Government has an important role to play by ensuring maximum flexibility under the key working time act provisions are provided to the dairy sector as a ‘priority industry’. Expediting testing for critical workers across the economy is also necessary to protect food security and the provision of vital services.
As the crisis deepens, global milk supply will exceed demand in the immediate term, as we enter into a challenging period. The full range of EU market supports measures and more will be needed and the EU Commission and Farm Ministers must act quickly and without delay. ICOS at EU level has secured the support of the EU co-op and farming body, Copa-Cogeca for the introduction of private storage aid and will continue to lobby for its introduction.
ICOS would like to recognise the stellar work done by senior management teams and boards across the co-op sector who reacted swiftly to the unfolding crisis by implementing business continuity plans with strict SOPs in place across the supply chain to protect their employees and to safeguard production.
The co-op sector spans the entire food supply chain with the agri-trading sector recognized as an essential retail outlet by the Government. The agri-trading sector deserves enormous credit for the range of strict physical distancing protocols introduced across store branches and networks.
The functioning of the entire farm supply chain through the duration of the COVID-19 public health emergency must be an absolute priority for the Government and public health authorities. The food processing sector including milk and meat is dependent on a range of essential service providers to the farming sector thus enabling the production of nutritious and safe food. These essential services must continue to function throughout the public health emergency, whilst adhering to the public health guidelines necessary to curb the spread of the disease.
The humanitarian costs of the outbreak continue to mount globally with over 500,000 known cases and 23,500 people have sadly died because of the disease. Dr Tony Holohan estimates that Ireland is only at the beginning of its curve in terms of infections, but we all can play a role in flattening the curve as our actions today will save lives in the near future.
Eamonn Farrell – Agri Food Policy Executive
28 May 2021