IFA National Dairy Committee Chairman Tom Phelan has said that, rather than changes to the SMP intervention buying-in rules, it would be far more important for the EU Commission to develop an effective strategy to dispose of the 380,000t intervention stock of SMP currently overhanging dairy markets.
Tom Phelan called on Minister for Agriculture Michael Creed, who will be discussing this topic with his EU colleagues at the next Agriculture Council on 29th January, to insist on an intervention management policy that will minimise pressure on dairy product prices during 2018, and will not undermine a proven market management tool into the next CAP.
“It is proving very difficult to sell this stock. Just over 2000t of SMP was sold out of intervention in the last 16 months, of which 1864t last week. Based on the bids received, the EU Commission set last week’s price at €1190/t, around €100/t less than feed-grade powder – by any measure an unsustainably low price,” Mr Phelan said.
“The large stock of intervention SMP is depressing fresh prices to unsustainable levels, when production is actually down 5% in the EU, and the supply/demand balance for the fresh product would justify higher prices,” he added.
“The EU Commission is seeking approval from the Agriculture Council to change the rules for intervention buy-in in a manner which could further depress prices,” he said.
“Minister Creed must insist that the integrity of the regulations, and the safety net they provide, are preserved, especially as intervention is a key market management tool with a proven track record of helping rebalance market disturbances,” he said.
“The Minister must also demand new thinking in the EU when it comes to the disposal of the accumulated intervention stock, to minimise pressure on dairy product prices. All potential uses which optimise its value must be considered, including non-food uses,” Tom Phelan concluded.