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ICOS President, Martin Keane, has cautiously welcomed the announcement on Monday from the European Commission of a €500 million package of measures to support European Farmers and Co-operatives.

He welcomed the fact that many ideas put forward by ICOS in the lead up to the package were taken up. Mr. Keane and ICOS Dairy Committee Chairman, Jerry Long met with Agriculture Commissioner Phil Hogan and his team last week on the issues involved.

Much of the detail still needs to be worked out, particularly in relation to the enhanced Storage Aid Scheme for Skim Milk Powder, focussing on higher aid levels and the adjustment of storage periods. However, the amended Scheme, if working correctly, could help to remove additional product from the market until the expected recovery happens.

Reacting to proposals around the Income Stabilisation tool, as well as the proposed strengthening of the European Milk Market Observatory, Mr Keane said that while these measures are long term measures, they could be utilised to develop a European Dairy Futures Market – necessary to effectively deal with cyclical market downturns. He said the ‘High Level Group’ to be established should also focus on this.

“Unfortunately dairy market volatility looks to be an ongoing feature of dairy markets.  We need to be in a position whereby we can offer farmers the opportunity to lock into a milk price at a sustainable and acceptable level. It’s unfortunate that EU market supports aren’t able to underpin that offering, and so we will need to look to utilise all the other structures on offer to develop it. The co-operative model is ideally placed to help facilitate this,” said Martin Keane.

However, he expressed disappointment at the failure to announce a review of intervention prices, as either an emergency or long term measure, as is provided for in EU legislation. “Markets are very susceptible to sentiment,” Mr Keane said, “and right now they need a strong message that Europe is prepared to act forcefully to help farmers”. ICOS is totally committed to maintaining the market focus of the European dairy industry, and it is in no-one’s interest to return to the bad old days of butter mountains, but right now, Europe needs to establish a market level, below which it will not allow prices to fall. The real market is currently well below the cost of production, and while co-ops have been sheltering farmers to a significant extent, it is vitally important that the market gets an immediate confidence boost. The prospect of facing into the 2016 season with prices still in the doldrums would be very damaging to producer confidence, and could do long term damage to Europe’s prospects as a competitive dairy producer.

Mr Keane said that he very much welcomed initiatives to help refugees, promote co-operatives in the food chain, boost trade and increase investment in the future through the European Investment Bank.

He said that ICOS would be watching closely as the detail of this package gets worked out in the coming weeks.

By TJ Flanagan, Dairy Policy Executive