The European Commission will next month begin the process of selling some of the skim milk powder (SMP) out of intervention.

High-level discussions in Brussels at the end of last week resulted in the Commission taking steps to sell SMP. A date of 13 December has been set for the first tender process to start selling SMP.

Some 334,551t of SMP has been placed into intervention so far in 2016. Ireland has not placed any into intervention since August, but placed just below 36,000t into intervention this year.

A figure of 22,000t has been mooted to be offered for tender next month. SMP was sold into intervention at a price of €1,698/t and the Irish Farmers Journal understands that bids of approximately €2,200/t will be lodged by interested companies for product.

The Commission is expected to reject the bids next month as a way of sending a signal to the market that it places a high value on the SMP in intervention. All the while, the Commission is continuing with its policy of taking product out of the market by paying farmers to reduce milk production.

Shadow over market

The volume of SMP in invention has been a shadow over the dairy market recovery. Despite the recovery in the markets and processors passing on price increases to their farmer suppliers, the overhang of SMP to come back on to the market has been seen as a threat to this recovery.

Two further tenders are expected to be issued in January.