24 May 2002

Lobbying secures 15% refund rise on cheese exports

By Philip ClarkeEurope editor

MILK market managers in Brussels have responded to concerted farmer lobbying with a 15% increase in export refunds on cheese being sold outside the EU, in an attempt to bolster prices.

The move follows the 30% hike in skimmed milk powder subsidies agreed in April and the boost to butter refunds back in January.

The latest rise, which is for all destinations except the US, is equivalent to an extra k.019/litre (1.2p/litre), says the Irish Farmers Association, which described it as "a positive first step forward".

But doubts remain about how effective it will be.

Repeated increases in SMP refunds this year have done little other than drive world prices lower, while intervention has continued apace. Figures presented in Brussels last week showed cumulative sales to intervention in the first four months since stores opened at 63,678t, suggesting the 109,000t ceiling will be reached by August.

The NFU welcomed the move in principle, but said it was difficult to say what effect it would have on farm-gate prices, if any. "If it is going to make EU product more competitive, then it may help," said Jenny Searle, NFU milk and dairy adviser. "But cheese is only part of the picture – we need further increases in SMP and butter refunds to have more impact."

The IFA said the commission should focus on other internal supports. "Beyond an increase in cheese refunds we also need an increase in the casein processing aid and, very importantly, an increase in the maximum ceiling for SMP intervention purchases," said president, John Dillon.

The comments came as farmgate prices remained under intense pressure.

Last weeks auction by United Dairy Farmers in Northern Ireland saw 33m litres of milk on three-month contracts fetch just 13.7p/litre, while 9m litres on one-month contracts went for 12.91p/litre. These were over 1p/litre down on the April auction.

Agriculture minister, Brid Rodgers, said the cuts were regrettable at a time when there was beginning to be some signof improvement in the international market-place, though traders were at a loss to know what improvement she wasreferring to.

Ulster Farmers Union deputy president, Campbell Tweed, urged milk processors to use the enhanced cheese refund to stabilise farm-gate prices. He also called for the refunds system to be amended as part of this summers mid-term review of Agenda 2000, to allow the aid to be targeted at specific regions. &#42

Better cheese support prices have been welcomed, but other measures to support dairy markets are likely to be needed to help ex-farm prices, say farmers unions.