Industry needs to look for longer term solutions to dairy crisis

19-Jul-2016 @ 12:00

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Dairy farmers must address structural weaknesses in their industry if it is not to lurch from one crisis to another, Conservative MEP Richard Ashworth said today.

Speaking during a meeting of the European Parliament's Agriculture Committee called to discuss a new package of EU aid to the dairy sector, Mr Ashworth thanked Commissioner Phil Hogan for bringing forward the much needed support but warned: "This package is, and can only be, a short term, sticking plaster measure and we need to find long term solutions.

"The current crisis in the sector crisis is driven by global factors affecting global commodities and no local solutions will change that."

The dairy industry has suffered from worldwide supply outstripping demand, the effects of the Russian embargo on food imports from the EU and a global downturn in all commodity prices.

The European Commission is proposing €150 million to support a voluntary reduction in EU milk production, as well as an extra €350 million for measures decided at national level. The Commission will also extend aid for storage schemes until next February and announced that 70 per cent of direct payments to farmers could be advanced to alleviate short term cash flow problems.

However, Mr Ashworth, the Conservatives' Agriculture spokesman, doubted that production restraint would be effective.

"When dairy margins are under stress the producer's instinctive response is to pull the lever which increases production from his farm and inevitably that squeezes the less efficient and smaller producers," he said.

"Removing milk quotas enabled restructuring and rationalisation in the dairy industry. Farmers with geographic and climatic advantages will understand they can, and they should, maximise production because that is in the best interests of the consumer.

Mr Ashworth added: "The crisis has exposed a number of structural weaknesses in the industry."

The Commissioner agreed with him when he urged the supply side "to take on board the need to get the industry into a more robust state so that it can better withstand future crises."

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