Europe agrees controversial plan for cuts in milk production

European authorities have agreed to introduce voluntary milk supply controls in a bid to halt the decline in prices.

The move, coming less than a year after the lifting of milk quotas, is likely to be opposed by several member states, including Ireland.

The European Commission said it would send member states the proposal which is required as an emergency exception to rules guaranteeing economic competition.

Overproduction of milk since quotas were abolished in April last year has been highlighted as one of the main reasons for the current slump in prices.

EU agriculture commissioner Phil Hogan told a crisis meeting of agriculture ministers in Brussels on Monda y that he was prepared to introduce supply management measures on a temporary basis to deal with the crisis.

“I am prepared to propose the application of such rules whereby the Commission... Would decide to permit on a temporary basis such voluntary agreements for the dairy sector,” he said.

“The full modalities of this measure have yet to be finalised by the Commission and I expect that we will be in a position to communicate these to MS (member states) very shortly,” Mr Hogan said.

The average price paid to Irish dairy farmers has fallen from 38 cent a litre in 2014 to a current rate of 24-26 cent a litre.

A glut in production globally but more recently in Europe, a slowdown in Chinese demand and Russia's trade embargo have all combined to bring prices down.

France has been demanding the introduction supply management measures to deal with collapse in prices.

However, in a submission prior to today's meeting, the Irish delegation led by Minister for Agriculture Simon Coveney insisted regulating supply was not an appropriate response to downturns in price.

Speaking from Brussels, the Irish Farmers’ Association’s national chairman Jer Bergin said Mr Coveney must reject the notion that progressive Irish and European dairy farmers are the main cause of the current international dairy market imbalance.

He said the current downturn was due to a multitude of global demand - China, Russia, low oil prices - and supply factors, which have coincided with the end of milk quotas.

“Minister Coveney must articulate strongly the fact that production management proposals being made by some member states, including France, are ineffectual, retrograde steps and must be rejected,” he said.

John Comer of the Irish Creamery Milk Suppliers’ Association (ICMSA) said dairy farmers here would welcome the signal that, finally, the enormity of the crisis and extent of the income wipe-out had finally “percolated through”.

He said the ICMSA had no objection in principle to a subsidy being paid to individuals not to produce milk on a state-by-state basis, but he said it was paramount that any such scheme was voluntary and that those farmers who had scaled up and planned on the basis of the ending of quotas were not in any way being compelled to cut back production.

With the cost of production in Ireland put at 25 cent a litre before labour costs, many farmers are now only breaking even on the milk they sell.