Dairy board chairman Michael Oakes attended the Copa Milk Group last week on behalf of the NFU, where farmers from across Europe shared information on markets, trade and the implementation of the July support package.
Michael said: “Even with the Brexit vote in June it’s vital that we remain close to our European counterparts, European stakeholders and the Commission. It was extremely valuable to compare market prices, especially as many UK milk buyers are pan-European, and to share notes on how the EU supply management scheme and national aid scheme have been implemented.
“The NFU dairy team will continue to work closely with the BAB team to push the views of British dairy farmers in the months and years ahead”.
Copa Milk Group round-up
After Mansel Raymond stepped down last week, the group’s new Chairman is Thierry Roquefeuil, from the French Farm Organisation FNPL. Mr Roquefeuil has been vice chairman since 2014.
Market Update
Overall, representatives reported that milk prices were increasing slowly but that there was a long way to go to recovery. Most reported a decrease in production, except for the Netherlands who are on course to produce more milk than last year, most likely due to a baseline being set for new phosphate regulations. In terms of price, the Belgian average is around 25c/litre, the Irish price for September was 26c/litre and the Netherlands predict 31 to 32 c/kg by December, with the same for Italy.
July support package – EU Milk Production Reduction Scheme
UK statement: UK dairy farmers were already reacting to the market downturn and production has been down since February. In that respect the scheme came far too late – but we encouraged eligible farmers to apply. We found it nonsensical that some milk buyers were paying bonuses for increased production at the same time and that many of our farmers in A and B contracts would have been penalised if they accessed the scheme.
The has been a varying degree of take-up in the scheme in different member states, with representatives from Spain, Portugal and Italy saying the scheme came too late. In terms of applications, 27% of producers in Ireland, 25% of producers in France and Belgium, 14% of producers in Sweden and 10% of producers in Spain have applied.
Detailed figures for the uptake of the Milk Production Reduction Scheme can be found here.
Germany and France are both co-financing the scheme, increasing the financial incentive to farmers. In the Netherlands Friesland Campina paid 10€/c on top of 14€/c in the scheme with 4,000 farmers applying for 80,000 tonnes in total. However, it was suggested that only half of the milk signed up to scheme will be reduced though because of improved milk prices. There was agreement from representatives that any funding not claimed by farmers should stay in the sector.
Exceptional Aid Scheme
UK statement: Defra has consulted with the industry in England on three possible options:
Support for environmental schemes (slurry store covers)
Support for risk management training
Support for small scale, family farm, pasture-based dairying
Defra is yet to publish the results, but the NFU has asked for a wider list of options for the environmental scheme, support for animal health schemes and producer groups.
Representatives reported that other member states were looking at funding for quality schemes on-farm (milk quality, animal welfare, environment), additional support for farmers in POs, low interest rate loans and using the funding to top up the Milk Production Reduction Scheme. Some governments, including Ireland, are co-financing the scheme.
EUCOLAIT trade report – export opportunities for EU dairy products
According to EUCOLAIT, in principle the future is looking good with global consumption set to continue to increase with population growth, changing diets and urbanisation all factors. Global trade will likely continue to increase faster than consumption as major growth regions (South-East Asia, MENA and Sub Saharan Africa) will become increasingly import dependent.
However, the share of EU exports in global trade will depend on the outcome of ongoing and future FTA negotiations led by the EU and competitors. Other factors include the stability of EU dairy policy, the integrity of the EU and its single market, political instability in key import regions, price volatility (which is here to stay) exchange rates and oil prices, climate change and environmental constraints and the growing trend for vegan/non-dairy in certain developed markets.
