Ireland-Dairy farms still in Crisis.

IRELAND-DAIRY FARMERS STILL IN CRISIS.

Dairy farmers cannot rely on the EU Commission to support milk prices at a reasonable level in 2009 unless there is a major change of attitude at European level, the ICMSA has warned.

Speaking after a meeting with Thorkild Rasmussen, head of the EU Commission’s dairy division, ICMSA dairy chairman John O’Leary said the EU Commission’s position was made very clear.

"They will support milk prices at about 21c/l and the market will have to sort itself out thereafter," he said.

Mr O’Leary said it was also made clear that for the market to regain equilibrium, dairy farmers throughout the EU will have to go out of business.

Meanwhile, dairy processors have warned that they will be unable to support milk prices through the coming months unless demand for produce on world markets improves significantly.

Vincent Gilhawley of the Irish Dairy Industries Association (IDIA) insisted that milk prices for the coming year would have to reflect returns for dairy products.

Undermine

"We dug deep in 2008 to support prices, but we can’t do that this year.

"We would weaken the financial position of co-ops and undermine the structure of the industry," he claimed.

Mr Gilhawley predicted that the failure of the EU Commission to take a more determined line in supporting the European dairy sector could drive markets even lower.

Hopes of increased support for the embattled industry were dashed last week when Mr Rasmussen said Brussels had met its market support commitments by introducing private storage aid, export refunds and intervention.

Mr Rasmussen held a series of meetings with processors, farmer representatives and other industry bodies during a two-day visit to Ireland last week which was organised by ICOS.

He insisted that additional assistance to the sector would not be forthcoming and ruled out the introduction of subsidies to encourage the use of skim milk powder in the production of milk replacer or butter in the manufacture of pastries and ice cream.

He said an increase on export refunds was not likely, saying the scheme was "operative and working" and that sizeable volumes of product had been contracted at existing levels.

In relation to the tender process for intervention, the Commission official said the volume accepted and the tender price would take account of the "serious situation" that currently prevailed across Europe.

Prohibited

But he said regulations governing intervention prohibited the tender price from exceeding the current fixed intervention level.

However, Mr Rasmussen’s approach to the problems of the sector was strongly challenged by Mr Gilhawley.

He claimed that export refunds were set too low and he claimed that processors had contracted product at current levels because of the need to move stock and liquidity worries within the sector.

"These are really fire sales," Mr Gilhawley said.