Calls for move on open ended dairy intervention

Chris Osborne, Senior Dairy Policy Officer and DR Mike Johnston, Director of Dairy UK NI at a recent meeting to discuss the current difficulties in the dairy sector.

This demand is part of a two pronged strategy to put the local milk sector on a more sustainable footing.

Dairy UK (NI) chairman Paul Vernon has confirmed that, under existing regulations, the European Commission will introduce an intervention tendering system, once the current Skimmed Milk Powder intake threshold of 109,000t is reached.

Instead, Dairy UK wants the intervention clock set back to zero. Processors view intervention as a proven mechanism for tightening supplies, and believe an early announcement to extend current intervention purchasing arrangements would help stabilise producer returns.

Dairy UK (NI) director Mike Johnston said that the introduction of a tendering system would have only one consequence for dairy farmers – further pressure on milk prices.

“The current intervention measures are putting a floor in the market,” he said.

“We believe that EU agriculture commissioner Phil Hogan is fully aware of this fact and, moreover, he is sympathetic to our request.”

But Johnston admitted that the commissioner is not the sole arbiter, when it comes to amending the intervention arrangements.

“There are certain processes to be followed when it comes to securing changes of this nature.

“We estimate that the SMP intervention threshold could be breached within the next few weeks. This is why we are calling for Commissioner Hogan to take the required action now.

“We are anticipating the largest spring flush of milk that Europe has ever had to deal with over the coming weeks.

“This is why full intervention support levels must be maintained throughout this critical period.”

Johnston fully expects the dairy industry in the Republic of Ireland to back the calls made by Dairy UK for the maintenance of full intervention support levels.

“Nationally, we have also written to DEFRA Minister George Eustice on the issue.”

The European Commission has confirmed to Farming Life that the threshold of 109,000 tonnes, above which tendering is introduced, is provided for within EU Council Regulation 1370/2013.

The amount of SMP currently in intervention is some 37,000 tonnes.

The second strand to the dairy sustainability strategy will centre on key players in the supply chain being invited to help develop a plan to deliver better margins for farmers. The aim is to have this up and running by the autumn of 2016.

Jonathan Moore, UFU dairy policy chairman said the initiative is a first, because it will see key players coming together to deliver benefits for the entire dairy supply chain.

“If we are to have a sustainable dairy sector we need innovative and collaborative action. The UFU believes this joint approach can deliver this,” he said.