Brussels sounds optimistic note on dairy industry

IRELAND - DAIRY farmers in Northern Ireland, who receive the lowest milk prices in the UK, have new cause for optimism.
calendar icon 19 January 2007
clock icon 2 minute read
A delegation of producers on a visit to Brussels, hosted by the Ulster Farmers Union and Dairy UK, returned home yesterday with a reassuring message, which will bring a degree of cheer to their Scottish counterparts.

The conclusion is that market fundamentals, including a strong demand, tight supply, economic growth and low stock levels, should allow world prices for milk powders to increase throughout 2007. Support for any surplus of dairy products has been severely curtailed, following the reforms of the Common Agricultural Policy, but there at last appears to be a realisation that if too many EU milk producers go out of business, then consumers will be the ultimate sufferers.

The European Commission stressed that it had to be seen to spend money in support of the dairy sector "sensibly". The view is that there is unlikely to be any foreseeable world surplus of dairy products. There was also agreement that the EU milk supplies are now in a state of close balance. Demand for high quality protein is now just about out-stripping supply.

A degree of back-pedalling is emerging. Previous commitments to abolish all support for the dairy sector are now less certain. Export refunds will still be initiated, if necessary.

A statement from the commission said: "In the longer-term the fundamentals of the dairy sector look favourable and the industry will have a favourable future without support."

That is in line with the expectations of Scottish producers, who expect prices to rise. Dairy farmers remember well that ten years ago they were receiving about 26p per litre. Current prices of 18p are little more than covering the cost of production.

Source: The Scotsman
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