Jul 3rd, 2009

Cahill says ICMSA vindicated as French and German governments call for suspension of milk quota expansion policy

The President of ICMSA, Jackie Cahill, has described last Friday's formal demand by the critical Franco/German alliance for a suspension to the Commission's policy of expanding quota as the first welcome sign that sanity might yet prevail in the formulation of EU dairy policy.

'The news that Minister Aigner of Germany and Minister Le Maire have written to Commissioner Fischer Boel requesting a suspension of the dairy quota increase for 2010 represents a huge breakthrough for those of us who have long identified the policy of expanding quotas to the point of abolition as being the prime destabilising factor in the collapse in dairy prices and dairy income. The Commission can go on defying every shred of logic and economics in pretending that increased production was not affecting price, but the two most important governments in the EU have weighed up the evidence and found themselves in complete agreement with the position taken
18 months ago by ICMSA and our European affiliates in the European Milk Board. The pressure must now come on our own Department to forget about the nonsense and get on the winning side in this struggle for the future of the European dairy sector', said Mr Cahill

Mr Cahill said that it was now becoming apparent that the real agenda behind the Commission's dismantling of the quota system was as a preparation for a re-heated WTO agreement that he said would annihilate the EU's dairy sector.

'The dismantling of the quota system is part of a deliberate process of softening-up the EU dairy sector in preparation for a WTO sell-out of the sector which is intended to leave Irish and other European dairy farmers selling milk at world prices plus three or four cents. The alarms should be ringing loudly in every office in the Irish dairy sector now but, almost unbelievably, we still have those who are unwilling or unable to see the threat looming up in front of them. It has been decided that quotas will go as part of any likely WTO process and with the world in the grip of the present recession, a trade agreement is now much more likely than when last attempted last year. Those still arguing for the dismantling of quotas and continued production expansion are unwittingly helping the Commission to destroy their own sector', said the ICMSA President.

Mr Cahill's reference to repeated smokescreen focussed on remarks attributed to Commissioner Fischer Boel in which she cited retailer margin as being responsible for the collapse in dairy farmer income and urged critics to look at the whole sector for causes.

'This is just more smoke to obscure the real picture. The Commissioner talks about retail margins but if I was getting 33 or 34 cents per litre for my milk it wouldn't matter to much to me what margin Tesco is getting as they sell it on to a consumer. The price that the retailer gets from the consumer is of secondary concern to Irish dairy farmers. The price that matters to them is the price their co-ops pay them for the milk to process for the supermarkets. And here ICMSA has to repeat - yet again - the obvious economic truth that the price the primary producer, the dairy farmer, gets is a function of the amount of milk available for sale. If we can regulate the supply of milk then the demand pressure from the giant multiples will drive up the price paid by the co-ops. What the supermarkets do with it after they buy in terms of price to the consumer is a very distant secondary consideration to our dairy farmers', stated Mr Cahill.

'ICMSA knows perfectly well that the retailers are maintaining their margins at our expense. We know that. The problem is that our dairy policy of year-on-year increased production of milk allied to withdrawal of supports has given the retailers the opportunity to name their own prices to the processors, who, in turn, cut the price paid to their suppliers. That is happening parallel to the Commission starting to prepare the ground for moving the EU dairy sector to world prices plus three or four cents per litre through the deliberate dismantling of any supply management system. That's the bigger picture and the bigger threat and those who refuse to face it are endangering the livelihood of every dairy farmer in the country. We cannot be diverted anymore. We must focus on the threat looming up and not allow ourselves to be distracted by a snappy pup when a wolf is coming our way. Thank goodness the French and German governments have decided to change course and avert the disaster that beckons the European Dairy sector' concluded the ICMSA President.

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