While Europe goes into lockdown, dairy farmers and processors are busier than ever, as they work firstly to ensure the continued supply of milk and dairy products on supermarket shelves across Ireland and the EU, but also to ensure the continued availability of processing capacity and functioning of logistical operations amid this health crisis as we come up to peak seasonal supply.
However, with the food service industry across the EU and the US now ground to a halt and with increasing difficulties for exports relating to new trade restrictions and increasing costs, the fallout from COVID-19 is putting considerable pressure on the sector.
In international markets, new border restrictions are being introduced, as countries attempt to stem the spread of the virus, this is bringing additional complications and costs for the trade of goods too.
In addition, there is a lack of freight containers in international ports, such as Rotterdam, needed to export produce to international markets. This is the result of a delay in the return of containers from China, where they are still awaiting a return to normal operations. As a result, the price of exporting has significantly increased in recent weeks.
With hotels, restaurants and catering services across the EU and the US shut down for the foreseeable future, there has been a significant knock-on effect for dairy products destined for this food service industry. In many cases these products will be shifted to the production of retail products, where possible, and therefore sold through the supermarkets. However, the majority will need to be shifted to the production of butter and powders and placed into storage to wait until the market recovers. With this growing demand for storage by agri-food processors, it is becoming increasingly costly for organisations to do even this.
ICOS is therefore calling on the European Commission to open Private Storage Aid (under the Common Markets Organisation Regulation) for butter, skimmed milk powder and all cheeses, to help the sector to deal with these additional and unexpected costs. Such an action would help prevent the market from becoming overwhelmed as markets, both national, European and International become restricted or close.
We are also calling on the Commission to ensure the maintenance of the European Single Market at the time. It is vital for the free flow of goods to continue, and border restrictions or trade barriers to be avoided in these times.
There is a significant level of unknowns around demand or even access to international markets over the coming months, as the virus spreads. Export credit insurance would be a help here, provided to agri-food exporters at either a national or European level.