The decision by the European Commission, announced over the weekend, to facilitate the delivery of short-term export credit insurance for EU companies is very welcome in light of the increased risks brought about by COVID-19.
However, ICOS said this is only ‘the tip of the iceberg’ in terms of what is required to assist the agrifood sector which is becoming increasingly more fragile as the pandemic unfolds.
ICOS and co-operative organisations from across Europe are jointly calling on Commissioner Wojciechowski, and DG AGRI to act now and activate market management tools, including Private Storage Aid for butter, skimmed milk powder and cheese, to signal a boost of support for the market and prevent a drop off in milk price.
Alison Graham, European Affairs Executive of ICOS said, “We see that dairy prices across the EU are falling. We know that as tough as things are now, they will only get worse if no action is taken.
“We are also seeking a number of vital temporary derogations from EU legislation to provide increased flexibility to support the logistics network and transportation workers. It is vital that we keep the chain moving, maintaining the delivery of critical inputs as well as the continued supply of exports across the EU and globally. We are learning from the experience of our co-operative colleagues in countries such as Italy, Spain and France, who are further ahead of us in terms of managing operations within a lockdown and facilitating the continued operation of logistics.
“New challenges are surfacing for co-operatives on a daily basis as they try to maintain the collection, processing and distribution of milk and dairy products while maintaining the safety of farmers and staff and managing the surge of peak production.
“Irish dairy co-operatives produce a significant number of products for the food service industry, which was shut down almost entirely across much of the EU and USA, over the course of a week, with no end date in sight for the restrictions. There is also a significant concern that there will be an economic downturn in our key markets, the USA and China – but also in Africa and the Middle East.
“The cost of exporting too has increased considerably, due to both a shortage of freight containers and logistical staff in the transport network. In Ireland logistics companies were running at about 50-80% of normal capacity last week, with some workers ill or needing to self-isolate, and others not willing to travel abroad or even within Ireland, for fear of exposure. Our ports are also operating at considerably reduced capacity, with only one ship being unloaded at a time. With tighter restrictions on movement announced by the Irish Government on Friday evening, these operation levels are anticipated to fall further still over the coming week. This is slowing down the full chain, and co-operatives are struggling to get trucks and haulier companies confirmed for operations.”
Welcoming the EU’s move on expert credit insurance, ICOS said this will help to reduce risk for Irish exporters. Export credits allow buyers of goods and/or services to defer payment, therefore creating a risk for sellers. Given the current circumstances and increased volatility in normally stable and trusted markets, there was a surge in demand by EU exporters for insurance against this risk of payment delays or indeed payment failure.
The European Commission decision will allow for public bodies to provide companies with short-term export credit insurance policies to cover their risks, in the event that private companies are unable to offer this coverage, until 31 December 2020. The Commission also allowed for insurance to be provided to cover exports to EU and OECD countries, which previously had not been possible, due to the enhanced risks in these markets.
Irish dairy co-operatives export over 90% of their products, and therefore are significantly exposed to these risks. For the last number of weeks, ICOS and the entire dairy industry have been calling on the Commission to allow for the provision of export credit insurance to facilitate continue trade on European and international markets with greater confidence during this period of instability and uncertainty.