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The European Parliament on 07 July adopted a non-binding report on the EU Dairy Sector drafted by Jim Nicholson MEP from Northern Ireland. The report received significant support from MEPs with 510 in favour to 154 against.

The adoption of the report comes at a crucial time for the EU dairy sector, with increased market uncertainty, the continuation of the Russian trade embargo and the abolition of milk quotas following 30 years of restrictions.

Existing safety net measures such as public intervention and private storage aid are categorised by report as insufficient. However, Commissioner Hogan was quick to pour cold water on calls to increase intervention prices during the debate on the report with MEPs in the Strasbourg chamber. Hogan said that an increase in intervention prices would be counter-productive and that a change of mind-set was required. The Commissioner pointed out to MEPs that the goal is not to produce as much as we can but as much as we can find a market for. As early as September 2014, ICOS first called on the European Commission to increase intervention prices in view of the collapsing world dairy markets.

Commissioner Hogan also resisted calls from MEPs to reinstate milk supply management, as a cohort of MEPs maintained their traditional viewpoint on milk quotas. ICOS are doing everything in our power to counteract this perspective, so as to allow our client dairy co-ops deliver their growth plans on their own terms.

The report acknowledges the crucial role played by co-operatives in terms of providing producers with greater negotiating power. Furthermore, the report calls on the sector to consider the wide spread adoption of milk supply contracts and to consider risk management options, such as locking in a milk price as a means to mitigate against market volatility. In many respects, Irish dairy co-op’s are ahead of the curve in the development of effective risk management tools and are showing the way in Europe. ICOS will also continue to encourage the development of financial instruments needed to make dairy futures and other similar tools workable in practice.

The report highlights the crucial need for generational renewal, modernisation and investment across the EU dairy sector. Moreover, the report stresses the need to add value to dairy products and calls on producers to take advantage of an increase in EU financial support aimed at promotion activities in domestic and third country markets.

The report also concludes that research and innovation measures need to focus on the development of innovative, high value dairy products such as nutritional products.