The European Commission are currently working on a new dairy support package, which will be presented to EU Agricultural Ministers on 18th July. The package is expected to include targeted aid to dairy farmers, financed by unspent monies under the EU budget.

The burning question is whether, conditions related to supply management will be attached to the receipt of aid. There is a growing momentum at EU level for payments to be targeted at those that curb output in a bid to restore market balance.

While speaking at the Agricultural Council in Luxembourg on 27th June, Minister Creed stated that the “the key word here is flexibility and it would be important not to attach conditionality or complications to such targeted aid”. This is a position which ICOS fully supports.

However, Commissioner Hogan at the Council meeting stated that “given the limitations on what can be done to encourage demand…we must inevitably focus on the supply side equation”. Speaking at a separate meeting with ICOS on 24^th June, the Commissioner articulated the strong pressure being exerted on the Commission by several Member States for a return to supply controls.

In recent weeks, ICOS was represented at the Dairy Forum organised by Minister Creed and separately at Copa-Cogeca in Brussels where the issue of supply management was discussed in detail. At these occasions, ICOS reiterated our view that the re-introduction of mandatory supply management measures would be extremely damaging to the Irish dairy sector at farm and processing level.

ICOS believes that it is unfair to ask EU dairy farmers to act as regulators of the global dairy market. A decision to reduce output in Europe will only hand over market share to our international competitors. Furthermore, dairy farmers and co-ops deserve legal certainty, having made significant investments in their enterprises following the abolition of quota. It is our view that supply management as a solution to volatility will simply not work, unless other measures such as import tariffs and export refunds are also in place.

The provision of EU funds to dairy farmers with conditionality is an enormously dangerous precedent, if this transpires to be the case on 18^th July. Irish dairy farmers for decades have been constrained by high quota prices and super levy. The European Commission will be effectively abandoning farmers in Ireland who have expanded over recent months in order to support their families’ future. Whereas a farmer in another country, who has all his expansion completed, courtesy of no super levy can now benefit from supports for easing back slightly. Is this an equitable approach when one considers that the EU increased milk production by 7 million tonnes in 2014 when Ireland was still constrained by quota and 3 million tonnes in 2015 when quotas formally ended?

Cash flow is the number one concern on dairy farms. Every effort at EU and Government level should be made in advance of 18^th July to ensure that cash flow is central to the package of measures that will be announced by Commissioner Hogan. The allocation of targeted aid must be equitable in its treatment of dairy farmers throughout the EU. This is essential.