Is Dairy Crisis Coveneys Property Crash

As the dairy industry faces into life post quota and milk prices in free-fall it is a worrying time for many dairy farmers across Ireland. While it is not the first time that dairy farmers have faced pressure on prices, what is different this time is the very heavy burden of debt that many farm families and young new entrants are carrying.

Much of this is due to the irresponsible manner in which the incumbent Minister has been relentlessly promoting dairying as a panacea to all the country's ills. Even before the current price slump the Minister's over optimistic predictions were not based on the economic reality of the world commodity markets.

Presently world consumption for dairy products is increasing at 2% and probably slowing due to economic factors, while production is increasing at 4% and all major producing blocs have signalled their intent to increase production, this has been the case now for several years now in the run up to the removal of quotas.

In this climate for the Minister to be advocating and activity promoting a massive 50% increase in production without ever at any stage “stress testing” these plans against a global price dip, interest rate rise or factoring in the current weakness of the Euro which makes our exports more competitive on international markets showed poor leadership and a lack of understanding of the market.

The Ministers insistence that the solutions lie in opening the intervention markets, resolving the Russian embargo, and that Ireland has a cost competitive advantage in producing milk are all erroneous and further misleading farmers.

Intervention is a short term solution which does not address the problem and while the Russian embargo has caused problems for the Baltic States, Russia is still a buyer on the world market, just not from the EU; if the embargo was removed it would not change the oversupply situation on the world market.

The constant refrain that Ireland has a competitive advantage in producing milk again does not stand up to scrutiny. While grazed grass is price competitive other costs in Ireland are high by international standards and leaves Ireland mid table in terms of cost of production.

Previous administration were held to account for their mismanagement of the construction industry , this minister is a culpable of creating a similar bubble in the dairy industry the effects of which will be felt for a long time as indebted farmers struggle in silence to stay afloat

AgriculturePaul Cotter