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, and also to ensure the continued functioning of processing and logistical operations throughout the COVID-19 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, the fallout from the outbreak of COVID-19 is putting considerable pressure on the sector.
Globally, new national border restrictions are being introduced, as countries attempt to stem the spread of the virus. These restrictions are bringing complications and new costs for dairy exporters, particularly relating to transport delays. In addition, there is a lack of freight containers in ports, such as Rotterdam, needed to export produce to international markets. These containers have been held in 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. Where possible, there has been a move to the production of products for retail in supermarket. However, for the most part, it is powder that will be produced, which will need to be placed into storage, to wait until the market reopens. With this growing demand for storage by agri-food processors, it too is becoming an increasingly costly option for businesses.
ICOS is therefore calling on the European Commission to immediately open Private Storage Aid (under the Common Markets Organisation Regulation) for butter, skimmed milk powder and all cheeses, immediately, to help the sector to deal with these additional and unexpected costs.
Such an action would help prevent the dairy market from becoming overwhelmed as national, European and International routes to consumers become increasingly restricted or close. This call is echoed by dairy organisations across the EU.
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 and trade barriers for goods be avoided in these times, in order to ensure the full delivery of products to consumers.
There is a significant level of unknowns around demand or even access to international markets over the coming months, as the virus spreads throughout the world. Export credit insurance for agri-food exporters would be a valuable help in this regard, to allow for the continued trade of goods with greater confidence during this period of instability and uncertainty. The possibility for this has already been opened up by the Commission and it is now important that it is made available to the sector.
Alison Graham – European Affairs Executive
24 Nov 2022