Declan O'Brien

“When you see farmers being paid 20c/litre for milk and receiving just over €3.00/kg
for beef and €3.80/kg for lamb, consumers are well able to see for themselves that
the farmer isn’t the one pushing prices up.”

“When we joined the EU in 1973 the farmer received three quarters of the retail
prices for beef and they are now getting less than one third. Dairy farmers are
getting less than 20% of the retail price for their milk,” he said.

“In the case of the beef farmer, they care for the animal for an average two years
and carry all the costs associated with bringing the animal to maturity. The super
market has the animal for two weeks. In the UK the average farmer gets 7-8% more for
his beef yet the retail prices are typically lower. Filet steak is selling today in
Tesco stores in the UK for the euro equivalent of €26.85/kg whereas in Ireland it is
costing €27.49/kg. Milk in the UK is selling for 88c/l compared with 114c/l- 119c/l
here.”

“Clearly there is an issue with the cost of doing business in Ireland but it must
surely be obvious to all that the farmer is not contributing to this problem,” Mr
Phelan concluded.

The mass demonstration, which will involve farmers from all the EU’s 27 member states – including six from the UK – is being organised by EU farmers’ body COPA-COGECA.

“Food production is the single biggest economic activity in Europe and it is facing serious problems,” said the organisation’s secretary general Pekka Pesonen. “Dairy in particular is in a very severe crisis, and other sectors, from pig meat and olive oil to sheep and goats are suffering, too.

“Even as the causes of the problems differ, the result is always the same – we are not getting a fair share of the value of the final product.”

The crisis affecting the dairy sector is likely to be a major focus of attention. Despite a decision by the EU dairy management committee this week to raise export refunds for milk powders, Irish Farmers’ Association leader Padraig Walshe called for a “much more aggressive approach”.

“Prices have fallen to their lowest level in recent history, in some countries to those of 1983. To make matters worse, production costs have remained at an all-time high. This is disastrous for farm incomes, endangering the very existence of dairy production in the EU.”

A taste of the protest to come next week was given in Brussels on Thursday (18 June), when hundred of farmers from Germany, France, Belgium and Holland drove their tractors to the city centre as EU heads of state met for a summit meeting. (See picture gallery below)

Almost 1000 tractors and 3000 farmers were involved, according to rally organisers the European Milk Council.

Their principle demand was for an immediate 5% quota cut, to tighten the market and allow cost covering prices to be achieved. But the EU Commission says production is already well below quota and such a cut would make no difference.

It is unjustifiable for farmers to be charged more to haul fallen animals than the rates applicable to similar live animals. Real competition is vital in this area and must be provided through utilisation hunts, kennels and direct delivery to rendering plants.

For remote areas the option of licensed on-farm burials must be made available.

Derek Deane said the cost of rendering fallen animals has been slashed over the last week through the use of rendering facilities in Northern Ireland. He said rendering charges are now in the range of €85 – €105 per tonne back from €180 per tonne just last week. These costs must be reduced further.

He said Northern Irish farmers are paying less than halve of what farmers here are being asked to pay.

With Irish knackeries and hauliers now availing of rendering in the North. Northern Irish farmers are currently getting calves collected for €14.60(£13.00) and 6-12 month old animals are being collected for €46.06 (£41.00).

The IFA Deputy President said the Minister is obligated to provide a cost effective infrastructure for the disposal of fallen animals and this must be provided immediately.

Speaking at last Friday's Farm Council meeting in Luxembourg, Commissioner Fischer Boel ruled out additional support for the dairy sector and suggested that milk production would have to fall back in line with demand for dairy produce.

Agriculture Minister Brendan Smith had called on the Commission to be more pro-active in terms of assisting the industry, but the Commissioner insisted that all available EU support measures had been brought into play.

The ICMSA described Ms Fischer Boel's position as "shocking" and claimed her comments regarding milk production confirmed that the Government and "many more in the dairy industry" had been fooled by her from start to finish.

"Some people in this country actually cheered her on as she took a sledgehammer to the quota system — a system which had managed and matched supply to demand for over 25 years," said ICMSA president Jackie Cahill.

Mr Cahill said Ireland should now work with France and Germany to demand a proper market control system that could match supply to demand and restore stability to Europe's dairy industry.

Meanwhile, Irish Dairy Board (IDB) chairman Michael Cronin has predicted that milk output will remain low over the next 12 months and that supplies for the current quota year would be similar to 2005/06 levels.

This suggests that Irish farmers will be unable to fill the additional 5pc of quota — taking butterfat changes into consideration — which they have received over the last two years.

Ireland was around 3pc under quota in 2008/09, and a further 3pc increase in the national quota will come into effect for this quota year.

Despite Kerry Group successfully appealing the Competition Authority’s ruling regarding the sale of Breeo Foods, which was excellent news for Dairygold, and this gave the co-op the opportunity to revisit their disastrous milk price decision.

“Dairygold suppliers have been completely let down by their co-op. It is totally out of character for Dairygold to lead the price down and to set their milk price a month in advance.

The Dairygold Board, by accepting to cut the milk price to 20c/l by the month of March, have turned their back on a history of paying strong, competitive prices reflecting a diversified product mix, and not pre-judging the market.

“At 20c/l, the Dairygold price is in line with that paid by the co-ops with the poorest product mix –despite all the money spent by Dairygold on Research and Development and diversification. Is there to be no benefit for farmers, that Dairygold cannot pay more than co-ops stuck with intervention equivalent returns for Skimmed milk powder and butter.

There must have been dubious management decisions made in Dairygold in the recent past, and the Board of Dairygold, who presided over those decisions, cannot wash their hands of them. It is simply not acceptable for Dairygold to lumber their milk supplier shareholders, who were already facing a year without income, with the cost of dealing with those bad decisions.

There are serious issues to be answered in Dairygold !

"The EU has so comprehensively mismanaged the Union's dairy market that virtually all EU farmers are now producing milk at below-cost production. In Ireland, as prices slip back to 23 cents per litre, we now have a situation where the costs of production are 3 cent higher than the price farmers receive. In the face of this catastrophic mishandling, we still have the EU Commission talking about 'a soft landing' and de-regulation. De-regulation, in this context, means only one thing: even lower prices and even more volatility. The Commission is recklessly undermining a vital part of our food industry – not just in Ireland but across Europe", said Mr Cahill

"All the talk about a soft landing, all the talk about the de-regulation and the taking-up of quotas is not alone useless, but amounts to a virtual fraud on the farm families who made huge investment on their enterprises and who are now forced to produce below the cost of production", he continued.

For the first time ever, virtually all dairy farmers in Ireland will incur a loss on their enterprises at the same time as they have invested unprecedented amounts of borrowed capital to comply with very stringent EU and Irish regulations on the Environment. Why has all this happened?

"As part of the EU Farm Council, Commissioner Fischer Boel and Minister Smith will blame virtually everything else apart from their own cack-handed mismanagement for the collapse in farmer incomes. Their continuance with a 'hands-off' policy of de-regulation and the systematic undermining of family dairy enterprises contrasts starkly with a situation where virtually every other economic activity is being regulated or supported by Member Governments. We know one thing with absolute certainty about the Commission's policy on European dairying: if the European milk sector is to be de-regulated then prices will fall further. The Commission and the Farm Council, who meet on this matter next Monday in Brussels, must again be told in the clearest terms – as they are being told today – that the abolition of any form of supply-management system will mean world prices for EU farmers.
We cannot produce milk at world prices regardless of how efficient we are. This is the reality and the Commission's failure to grasp this inescapable fact is both depressing and alarming", stated the ICMSA President.

"The EU must continue with supply-management, which simply means that production is managed to levels of demand for milk and dairy products. This has been the system for over 25 years. If there are increased market opportunities – which there may well be – then milk quota amounts can be expanded to meet this increasing demand. A free-for-all, de-regulated system is neither good for consumer or farmers as prices will fluctuate by as much as 100 per cent from year to year. Our message to Commissioner Boel and her Commission colleagues today is very clear: you are responsible for the chaos in the dairy sector and the huge losses being suffered by dairy farmers at present. It is your responsibility to correct this"

Mr. Cahill said that immediate action is required on the operation of the EU intervention system, export refunds and other measures that could provide a solid floor for milk price so that normal market prices can be restored as soon as possible.

These measures were available until recently to support what is effectively a structural surplus of milk production in Europe. The withdrawal of these measures, while simultaneously 'green lighting' increased production of milk was both illogical and reckless, concluded the ICMSA President.

Yes, is the short answer. But such productivity gains are not easily won. Previous breeding decisions, made over the past 10 years, will influence any productivity gains that may be achieved.

Productivity gains come into their own in a period of challenging milk prices, such as we will have for 2009. Can dairy farmers help themselves? Yes, is another short answer. Losing milk receipts, through SCC, TBC, added water, sediment or thermoduric issues should be a no-no from the start of the year, but losing milk receipts through poor fat and protein figures is a whole different ballgame.

The technology for increasing fat and protein content in milk is well known. It is not a well kept secret. I met a number of dairy farmers today who have yearly protein figures of 3.5pc, coupled with good cow performance. Good cow performance to me is a herd producing between 420-440kg MS/cow, stocked at 2.8LU/kg.

A number of you would have followed the performance of a discussion group that I reported on for 2008. I think it would be no harm to reproduce their fat and protein figures for 2008 (see table above).

These are impressive figures and they delivered a net milk price inclusive of VAT of 36c/l in 2008.

This year began well with a milk protein for February of 3.46pc. What milk protein pecentage did you achieve for February 2009? Is it close to the figures achieved by this group?

I am hearing reports of milk proteins dropping in the past week. This is natural. The cow can only manufacture milk protein in her body for the first three weeks post calving. After that, it is all downhill for the next five weeks, at which stage it bottoms out and should begin to rise again.

Yes, you can minimise the dip and the best way is through grass in the diet. The more grass the better and since the weather has been kind to us for the past few weeks, calved cows should be out on grass day and night at this stage. And remember, according to the spring rotation planner, you are supposed to have 30pc of the farm grazed by March 1 and that was two days ago.

Is it by accident that our group has an overall protein of 3.51pc? No, is the quick answer. Part of the reason for it is to be found in their Herd Plus report. As a group, their pd (predicted difference) for milk production is +129kg, but more importantly their pd for milk protein percent is +0.05pc.

Now, if you multiply the 0.05pc by four, you arrive at a figure which expresses the genetic potential for protein production in the herd.

We know cows have a certain genetic potential for protein production, but do they get a chance to express it.

The base cow in the ICBF data base has a protein percent figure of 3.28pc. Now, adding the 0.02pc (0.05 x 4) to 3.28, one arrives at a figure of 3.48pc.

The cows in our group delivered 3.51pc. So they are punching above their 'genetic weight'. Can you achieve and maybe surpass the group March milk protein figures?

By John Donworth Farming Independent 

Mr Kennedy said, "there is a crisis of unprecedented scale in milk production all around Europe. All our colleagues have confirmed that milk prices are falling, and are now substantially below production costs. This situation is unsustainable and underlines the importance of urgent action.”

Based on the information gathered from farm organisations across EU member states, Richard Kennedy said it was imperative that Agriculture Minister Brendan Smith worked with his colleagues to apply the necessary political pressure to provide the supports needed to stabilise milk prices.

“Like his counterparts, Minister Smith is aware of the deepening problems caused by the extraordinary weakness of dairy markets. The Minister must build alliances and pursue the necessary measures to stabilise the markets and support the incomes of dairy farmers.”

But be careful with what is been offered and check the compounds when comparing as some imports may differ from what we normally see here in Ireland.
Fertilizer survey this week

Urea Gran €335-€460
Prilled urea €300- €425
27% CAN €350-€390
24% CAN+S €325-€380
14-7-14 €445-€505
18-6-12 €470-€580
27-2.5-5 €420-€540
24-2.5-10 €438-€540
As you can see big variation so shop around.

Fertiliser is the second biggest expenditure on most livestock farms after feed, and in the case of tillage farms it accounts for over 33% of production costs. Irish farmers are being asked to pay considerably more for their fertiliser than their EU counterparts and this is severely eroding the competitiveness of Irish agriculture. The dramatic fall in international wholesale prices is clearly not being passed back to farmers.

International urea prices, both for prilled and granular, have fallen to their pre 2008 levels yet farmers in the south of the country are being asked to pay last season's high prices of €420 to €440 /t. Recent competition from farmer imported material has forced a number of co-ops and merchants to lower their prices by up to €40/t (€384 /t for granular urea) but a sizable gap still remains between the two prices.

Despite their claims, the major co-ops are no longer providing a value for money service when it comes to supplying fertiliser. By virtue of their size and buying power they have a considerable advantage over their competitors but this is not being passed back to their members. Instead they are commanding a margin in excess of €70/t.

Farmers need to take more control of their businesses and eliminate unnecessary costs. There is no longer room for two margins. The supply chain has to be shortened and costs removed. A seismic shift in the way that farmers do business is happening arising out of the fertiliser debacle. More and more farmers are seeing the benefits of belonging to a purchasing group and this trend will accelerate over the coming years. We can no longer afford to pay retail prices for our inputs and take wholesale prices for our produce."

Minister Smith said: "The Government is investing significantly in the dairy processing industry to ensure that it has the capacity and technical capability to process the increased production that I secured as part of last November's Health Check negotiations. The decision by the Government to provide €114 million in the Dairy Investment Fund was a huge vote of confidence in the long-term future of the sector." Three of these investment grants were allocated to processors in the Border region – two to Lakelands and one to Town of Monaghan. "This is further evidence that dairy production has a healthy future in this area," said Smith.

Referring to the current turbulence in international dairy markets Minister Smith said: "While markets are facing short-term uncertainty, analysis shows that the long-term outlook is bright." The main international forecasting organisations predict global growth in wealth and population in the medium term. "This will present new opportunities for quality producers like Ireland, and all areas of the dairy sector can expect to reap the rewards."

In the meantime the Minister welcomed the recent reinstatement of export refunds for butter, skimmed milk powder, whole milk powder and cheeses, and the opening of private storage aid for butter. While these measures had not yet provided the level of stimulus required in the market, Minister Smith said that "given time and further adjustments in the level of support, which my officials will be seeking in Brussels later this week, I am confident that the scope of these market measures would, together with supply side adjustments, prove instrumental in restoring balance to the market and reverse the current market difficulties".

The Minister said that Government's decision would ensure that 80 per cent of the cost of the outstanding farm waste management grants will be paid within the next ten months.

Minister Smith said that the scheme had served its purpose very effectively in assisting farmers to ensure that they had the necessary storage facilities to meet the higher environmental standards required by the Nitrates Directive and to protect farmers from the threats to EU payments, following a judgement of the European Court of Justice in March 2004 that Ireland was in breach of the Nitrates' Directive.

Minister Smith said that "continued failure to implement the Directive would have had very serious consequences for the country, including the prospect of substantial daily fines as well as the potential threat to EU funding for rural development schemes and the Single Farm Payment, worth €1.6 billion annually to Irish farmers."

The Minister said that "the generous level of grant-aid, worth up to 70 per cent in some cases, was designed to encourage farmers to invest in waste storage facilities, to meet the national deficit in such facilities and to take the action necessary to resolve the ongoing difficulties with the Nitrates' Directive."

Minister Smith described the scheme as "an essential infrastructural investment and as important to the agri-food sector as other major infrastructural investments were to other sectors of the economy," and said that the phased payments of the grants, worth up to an estimated €550 million, "reflects the current public state of the public finances and the particular pressures on expenditure within my own Department, which will still exceed €3.4 billion in support of the Irish agri-food sector this year."

Minister Smith said that paying on a phased basis was "a more equitable approach than paying only a portion of claimants in full and ensured that each claimant received a significant proportion of their payment in 2009 with 80 per cent of the grant being paid within the next ten months."

The Minister said that his Department had already paid over €549 million in grant aid since 2006 to over 17,600 farmers and, while the final cost of the remaining 17,000 claims had to be confirmed, it is estimated that the total cost of the scheme to the Exchequer will be in excess of €1 billion, making it the most significant on-farm investment scheme in the history of the State. He said that the scheme was "an essential infrastructural investment in the Irish agri-food sector, which recognised the high value of the sector, not least given the value of agri-food exports, currently worth in excess of €9 billion annually."

Minister Smith concluded that "in recognition of the pressure that some farmers may be under for early payment of the grant, I have arranged to meet the main banks tomorrow and I will be making strong representations to them to facilitate those farmers who are due their farm waste management grant, which the State is committed to paying in full. I am confident that the banks will appreciate the phased basis on the which the grants are being paid and will be understanding of those farmers whose grants are guaranteed by the State."

The cows had been eating the same contaminated feed which caused pork and beef to be pulled from the shelves just before Christmas.

The milk was distributed across Northern Ireland and the Republic.

The Food Standards Agency has not called for a withdrawal of products, but said it will test and restrict the milk until it complies with the law.

"The milk from these farms is usually mixed with milk from other farms before sale, so any finished product on the market is likely to be diluted and well within the legal limits for dioxins," said an FSA spokesman.

"The risk to health from either drinking the affected milk or eating products made from the milk is extremely low."

Addressing the Oireachtas Committee on Enterprise today, Mr Walshe said the Committee should recommend to Government the introduction of a Code of Practice.

The IFA President referred to a report Food Prices in Ireland – Report to the Consumer Liaison Panel, 2007 conducted by the Department of Food Business and Development in UCC.

Overall, the key findings of this report, which analysed producer and retail prices over the decade 1995-2005, identified that there is a huge discrepancy between the producer and retail price, and that for most products, this gap was widening.

He said, "As a result of this, producers are being forced to produce below the cost of production, which if this is not addressed, by way of a code of practice, we will end up with less food produced within Europe and thereby more dependent on unregulated imports."

Mr Walshe told members of the Committeee that a key issue to be addressed for producers is food labelling. This surfaced again during the pork product recall.

Also in the context of labelling, "Substantial transformation" is another sham being used to disguise imports. Imported meat, of lower standards, is covered in breadcrumbs, spices or sauces and called "Product of Ireland".

The 2006 Partnership Agreement includes a commitment on the extension of Country of Origin labelling to the pigmeat, poultry and lamb sectors. The Government must deliver on this issue in 2009.

Padraig Walshe said producers and suppliers are so fearful of the power the supermarkets wield over them, they are scared into silence and submission, lest they be delisted at the whim of a buyer.

Mr Walshe told the Committee that in the past year, IFA was forced into mounting a media campaign for Honesty in Food Pricing.

This campaign highlighted the following: · Farmers can't produce 2 for the price of 1; · Discounts ultimately damage farmers' livelihoods; · While supermarkets keep their margins, discounts come straight out of the farmers' pockets; and · Food cannot be produced as a loss leader for predatory price campaigns.
The IFA President said, "over the last number of decades, increases in the cost of living have far outpaced increases in the cost of food. Since 1995, the cost of living has increased by 51%, while the cost of food and non-alcoholic beverages in the consumer basket has increased by only 41%."

He said, "Overall, food costs as a proportion of consumer income have fallen. As a result, while in 1995, the average consumer spend was 16% of personal income on food, today this figure is closer to 7%."

Mr Walshe said, "At the same time, while consumers have been benefiting from higher incomes and lower food prices, farmers have experienced a fall in income. In real terms, farmers have experienced a fall of 35% of income since 1995."