Since the original imposition of the Russian ban almost exactly a year ago ICOS has been campaigning heavily at all levels to drive policy change to help arrest the slide in dairy markets. ICOS has always attempted to be proactive and put forward solutions that were realistic, achievable and concrete while delivering benefits to our cooperative members at the shortest term possible.

The following are the suite of proposals we are making to strengthen Irish and EU dairy, not only for the short term, but to also look to the future to see can we stop the boom/bust cycle that has plagued the industry in recent years.

We do not advocate the activation of the CAP ‘Crisis Fund’ which comes out of farmer’s Direct Payments that could result in a modulation of payments to all farmers of up to 2.7%.

            Short Term Measures:

1. Creating export demand. We need the EU to put money and political effort to find alternative markets to replace what we lost in Russia and China. Elsewhere in this newsletter we give updates on the opportunities in East Asia, but interesting markets such as Iran (which is just out of a long period of sanctions) and Brazil have significant dairy deficits to be filled. Superlevy money should be made available for this.
2. Strengthening of the market safety net. While acknowledging that the Commission has made welcome moves to amend these rules, ICOS urges further flexibility in the Private Storage Aid (PSA) and Intervention instruments to be more useable to operators and help reverse negative market sentiment. We want a review of the Public Intervention instrument, as is provided for in the 2013 CAP deal secured by Minister Coveney. The current Intervention price levels were set in 2003, while farmers’ costs have multiplied since. ICOS has long argued for a realistic review of intervention prices, but because of legal issues explained later, it cannot be delivered in time to address this current market situation, none the less the instigation of the process would give a strong signal to the markets.
3. Direct payments to be brought forward to help with on farm cash liquidity.
4. Payment his year’s farm tax bills be allowed to be deferred (as announced in France) to help liquidity. Following two relatively good years in dairy markets, many dairy farmers used cash flow, rather than borrowings to fund expansion, the cash was poured into stock or facilities, but an associated tax bill will hit this autumn.
5. The European Union has to find a way, to come back to reasonable trade relations with Russia where European farmers are not the victims of geopolitics.
6. The Milk Market Observatory needs to be strengthened to give better data for co-ops and farmers to react to markets. The world is still adding people at a rate of 80 million a year, and ICOS believes that the current market issues are as much sentiment-driven as it is supply and demand. Even the New Zealanders believe the GDT is over emphasised and a stronger MMO can counteract this.
7. Invest Super levy Funds to Supplement the ‘Hogan Fund’ EIB plan for Agri investment. The Commissioner launched his plan to much fanfare before the summer for long term investment at farm & industry level. Super levy funds are an ideal means to bolster this fund for greater long term positive influence for European Agriculture. Top-up funding for measures like TAMS may be appropriate.
   

   Longer Term Measures:

8. Assisting Farmers with Volatility and Risk. The EU has to be more proactive in helping with the development of price hedging, futures markets, margin insurance and other risk management measures to ensure that farmers and their cooperatives are more protected. Super levy money can again be used in the delivery of training programmes for same.
9. Strengthening the producer in the food chain through co-operatives. This dairy slump has shown the value of the Irish cooperative system, with farmer owned businesses absorbing the worst of price reductions for farmer members with milk prices holding during peak production. Both The EU and the Irish government need to back farmer training to be able to participate fully in their cooperatives as active members and Directors, strengthening their position in the food chain. It should be noted that in the UK, some producers, not in cooperatives, are on ‘B contract’ rates of as low as 7p per litre!
10. Further EU Support for Applied Dairy Research and Innovation to add value to Milk

ICOS is currently working hard with like-minded organisations to add weight and support to these proposals in advance of the September farm minister meeting in Brussels.

Legal note on the raising of dairy intervention prises for SMP & Butter:

Under article 7 of regulation 1308/2013 the Single Common Market Organisation of the CAP, the reference thresholds are laid out for intervention.

Art 7.2 does indeed state that while the Commission does have the power to review and update the thresholds taking into account objective criteria.  But then the article clearly states that the change can only be made in accordance with ‘with ordinary legislative procedure’. This means at minimum an 18 month legal process of co-decision involving a now highly politicised EP and Council.

By Conor Mulvihill