COMMITTEE:THE DAIRY industry is in collapse and the product cost is below production price which will force farmers out of the business, a Dáil committee was told yesterday.
Vincent Gilhawley of the Irish Dairies Industries Association (IDIA) told the Joint Committee on Agriculture, Fisheries and Food that the crisis did not include cuts which would come from meeting EU greenhouse gas emission targets. He said meeting the EU target of a 20 per cent reduction in emissions would mean reducing cow numbers here by 20 per cent which would render the industry even less competitive.
He said the price for milk spiked in 2007 to 40 cent a litre, but the market was now returning only 24 cent a litre and the US and New Zealand could chase markets at below this price.
"Global dairy markets have collapsed and we see it impacting here where the Northern Ireland auction for milk in August saw 34p per litre being paid and last week only 18 pence per litre was what what being offered."
In September last year, Mr Gilhawley said, the Irish Dairy Board was paying €4,100 for a tonne of butter but that price in October 2008 was €2,050. Skimmed milk powder had dropped from €3,600 a tonne to €1,750 in the same period.
"The situation is that it looks as if we have to produce more and work even harder to get even less because of the removal of EU supports and the intense competition from abroad," he said.
Michael Barry of IDIA said Ireland's gas reduction targets had been based on gross domestic product and that had since fallen with the economic slowdown.
Unfortunately, agriculture had been linked with the transport sector in the EU calculation and it should not have been, he said.
"Energy generation continues to be the largest source of methane emissions, while enteric fermentation in cattle was agriculture's primary source of emissions. There is no international standard for measurement and different countries measure different things and there are only eight farms in Ireland being assessed."
He called for the monitoring of at least 1,000 Irish farms to determine the true output, so Ireland would know what it was agreeing to before committing itself to a protocol.
Members of the committee expressed concern over the fact that the Rural Environment Protection Scheme and forestry, positives in reducing greenhouse gases, were not being credited to agriculture.
In Athlone last night, Aaron Forde, chief executive of Connacht Gold, told an IFA dairy seminar that markets had plunged on an unprecedented scale not seen since 2007.
"Prices will not begin to recover until a combination of global economic improvement, demand growth and reduced supply emerge. This is not likely to happen before mid- to late-2009," he predicted. "The examination of new processing and marketing structures is now urgent.
"The planning cycle is long and the market will make the decisions for us if we fail to act."