According to figures from AHDB, a levy board for UK farmers, questions are being asked as to whether intervention and Private Storage Aid (PSA) are the most suitable support mechanisms to deal with oversupply in the European milk market. The question comes in light of figures analysed by AHDB which show that the three European countries who produced the most extra milk between 2014 and 2016, the Netherlands, Germany and Ireland, are not the countries who had the most product in storage at the end of March 2016.
According to figures from AHDB, a levy board for UK farmers, questions are being asked as to whether intervention and Private Storage Aid (PSA) are the most suitable support mechanisms to deal with oversupply in the European milk market.
The question comes in light of figures analysed by AHDB which show that the three European countries who produced the most extra milk between 2014 and 2016, the Netherlands, Germany and Ireland, are not the countries who had the most product in storage at the end of March 2016.
Between these three countries, only 16% of their extra milk was sitting in intervention or PSA in the form of cheese and SMP, whereas Belgium had 86% of its extra milk products sitting in store and France had 68%.
Source: AHDB, MMO, Eurostat
This suggests, AHDB comments, that the three EU28 countries who have driven the biggest increase in milk production "are not over-relying on intervention to support their marketing plans".
"At a time when milk production is expanding, intervention can be seen as simply a safety net for those who haven’t got a marketing plan to match their increase in milk production," the levy board says.
It adds that the challenge for the EU Commission is whether there is a better way to support the market than the current intervention system.
"This support should encourage and reward those who are driving a controlled expansion plan alongside a clear and achievable sales and marketing plan".
Comment
Commenting on the findings, IFA National Dairy Committee chair Sean O’Leary said: "I believe this fact should weigh more heavily in the ongoing simplistic discussions about the wisdom of production management as an obvious solution to the dairy crisis.”
“It is simply a fact that expanding production just because one can, and without a marketing plan, is not wise, but doing so because there is a sustainable long-term market for it and a plan to develop it, such as Ireland has, is a very different proposition.”
Milk production
The latest figures from the European milk market observatory show that milk production across Europe increased by 2.6m tonnes in the first quarter of 2016 and Ireland is the fastest-growing European dairy nation. Milk deliveries in Ireland in the first quarter of 2016 increased by almost 35% on the first quarter of 2015. This is nearly 10% more than the next fastest growing country in this period, Cyprus.
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