Profitability Not Output is Key
Commenting today after the AGRI Committee meeting in the EP in Brussels on the package of measures announced for the Agriculture sector, MEP Luke Ming Flanagan highlighted five areas for consideration:
1. Will the voluntary nature of the scheme be sufficient on the supply side (i.e. the producers) to send a signal to the markets that farmers are not willing to continue with below cost production?
2. Given the limited nature of the budget available, will it be absorbed by those already planning to exit the industry and thus, have negligible effect on output?
3. Will Minister Creed look to target this new tranche of support at those most in need in the dairy sector, for example the new entrants who are heavily borrowed, dairy farmers in disadvantaged areas, and small operations that don’t have the advantage of economies of scale?
4. As the Minister has wide flexibility in the implementation of this package of measures, will he look beyond the dairy sector to support other food production areas that are struggling?
5. Commissioner Hogan spoke of the need to restore balance in the market place and while the current measures are welcome it ignores the elephant in the room, the imbalance in the food chain as a whole and the dominant position of the retailers; will the Commissioner now back the AGRI Committee call for regulatory action to curb the power of the retailers to ensure a fair return to the primary producer?
In conclusion, MEP Flanagan said that farmers themselves need to reassess their options and while reducing production may be anathema to many, farm profitability not farm output should be the goal. By critically analysing their cost base and availing of the supports that are on offer to move to systems less dependent on high inputs and more tailored to the carrying capacity of their land, they may find themselves in a better place in the medium term.