In a further sign of growing confidence in dairy markets, the EU Commission's Committee for Animal Products yesterday (Thursday) floated the idea of drawing up a draft regulation by the end of this month to allow for the sale of a limited amount of SMP out of public intervention.

The Irish Farmers Journal understands that the regulation includes a provision to put 22,150t of SMP out to tender to prospective buyers by 13 December.

Some 334,551t of SMP has been placed into intervention so far in 2016, via fixed price and tender. Ireland has not placed any into intervention since August.

It is believed the EU wants to test the waters by proposing the sale of a limited amount of SMP back on to the market.

Two sides to the coin

A spokesman for the Irish Dairy Industries Association, which represents Ireland's primary and secondary dairy processors, told the Irish Farmers Journal that there are "two sides to this coin".

"On the one hand, we totally see the logic of getting it out," he said, "because it is a weight down on the SMP market and it will have to be let out at some point. But on the other hand we need to make sure it won't distort or overheat the market. Although there are green shoots in the sector at the moment, prices are still low and signs of recovery are not yet apparent on the protein side."

The spokesman added that the IDIA does, however, welcome the fact that only a limited amount of SMP is being proposed for sale.

"We welcome the fact that a limited volume is being floated, and, to be fair to Brussels, they have in the past been cautious about managing sales out of intervention back into the market," he said.

Member states have not sold any SMP into intervention since the end of September, lending extra weight to the view that dairy markets are enjoying a partial recovery after nearly two years of poor prices on the back of the abolition of EU dairy quotas and reduced demand from China.

Ireland has so far this year placed just below 36,000t into intervention, a significant increase on the 1,843t the country sold into intervention in 2015.

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