Europe is attempting to rein in milk production by its 52,000 dairy farmers with a scheme to pay them to not produce milk, and while the farmers have rushed to take it up, the success of the plan will not be known until early next year.
The 150 million euro carrot – more than $233 million – has been fully subscribed, with Agricultural Commissioner Phil Hogan predicting the move would lead to a fall in production after four years of continuous increase.
“I am confident that this measure, allied to others included in the July and earlier packages, will contribute further to an already stabilising market situation in the European dairy market,” Hogan said.
He forecast it should mean at least a 2 per cent cut in European production by the end of the year.
An EU official described the scheme as a last resort after an earlier attempt to encourage farmers to curb production had failed.
On average each farmer who applies will milk 20 tonnes less and will be paid compensation of 2800 euros – about $4363.
The scheme might encourage farmers to delay calving which would cut milk production in the next few months, or they may opt to cull cows. Either way, their responses should help to stem the milk tide. Farmers will have until mid-February to provide proof that they have reduced production.
On website Agriland, Irish farmer Donal O”Sullivan was not convinced by the talk of delaying calving.
“How exactly are farmers going to delay calving? That’s a trick I’d love to learn,” he wrote.
National take-up of the compensation plan varies, with total volume reductions ranging from 286,000 tonnes in Germany and more than 100,000 tonnes in France and the United Kingdom to less than 1000 tonnes in Malta and Cyprus.
The largest number of participating dairy farmers are in France with 13,000 of them signed up, Germany 10,000, Ireland 4500 and Austria and the Netherlands both 4000.
This Milk Production Reduction Scheme was announced by Commissioner Hogan at the July Agriculture Council as part of a €500 million aid package for the dairy sector. One of the measures was to stockpile skim milk powder, with tonnages in storage now at 350,000 tonnes.
Some critics have described the move as a distortion which is delaying the inevitable, while supporters believe it reduces volatility.
Farmer representatives are unhappy that, while prices for dairy goods in supermarkets have remained the same, farmgate returns have dropped by between 30-40 per cent.
Milk chairman of lobby group Copa-Cogeca Mansel Raymond said “someone is making a profit and it’s not farmers”.
Source: NZ Farmer
