Following unprecedented price rises in 2007 and the beginning of 2008, the situation on the dairy market has now been completely reversed.
With increased supplies on the world market and reduced demand on the internal market, prices for dairy products have been forced down to below intervention levels.
The price paid to EU milk producers has followed the same route, though to some extent GB producers have been insulated due to the shortage of milk and the strength of sterling.
“The severity of the fall in milk prices over recent months has surprised many,” said EU agriculture commissioner Mariann Fischer Boel. “I have spoken to many producers during my travels and their anxiety is clear. Now it is time for the EU to help.”
Export refunds- not used since June 2007 – will be activated, not only for butter and skimmed milk powder, but also for whole milk powder and cheese.
The level of refunds will be fixed by tender every fortnight, starting next week.
The EU Commission is also poised to open up intervention, with public buying of butter and skimmed milk powder to resume on 1 March (with production from February being eligible).
The first 30,000 tonnes of butter and 109,000 tonnes of skimmed milk powder will be bought in at the fixed intervention price of €2217/t and €1698/t respectively.
“We expect that this quantity of butter will be taken quite quickly, and consequently it will be necessary to support the market beyond this limit,” said a statement.
As such, further quantities may be accepted above these thresholds with prices to be fixed through fortnightly tenders.
Northern Ireland milk producers, who have been particularly badly hit by the global market downturn, have welcomed the move.
Ulster Farmers Union president Graham Furey said the commission had thrown his members a “lifeline”, as many were now operating below the cost of production.