“At a recent Agriculture and Fisheries Council meeting, the deteriorating situation on the European dairy market was raised by several member states. Belgium and Slovakia, with support from Bulgaria, Hungary, Italy, Lithuania and Slovenia, called attention to the growing imbalance between milk supply and demand and urged the European Commission to examine European crisis measures, including a temporary and voluntary milk production reduction scheme,” reports Denis Drennan, European Milk Board (EMB) member and ICMSA president.

“This shows that concern is no longer limited to individual countries or national associations. Across Europe, dairy farmers are warning that current market developments are pushing producers into an increasingly untenable position. In Ireland, for example, ICMSA has publicly called on the Irish government to support an EU-wide voluntary supply reduction scheme. Similar pressure is now needed across member states, because this is a European market problem and it requires a European response.

“The essentials of the proposed scheme are self-explanatory, and its effectiveness lies in its simplicity: the EU would offer milk producers compensation per litre for voluntarily reducing production during a defined period. This would send a clear signal that supply volumes are being adjusted, helping to restore balance between supply and demand and encouraging buyers to return to the market.

“The question for dairy farmers across Europe is therefore clear: how do we convince the Commission and national governments that this is one of those moments when the market will not simply correct itself in time? Even if a gradual rebalancing were to come eventually, many farms do not have the time to wait for it. Milk prices in several Member States remain below production costs, while input costs, in particular fuel and fertiliser, continue to weigh heavily on farms. This is no longer a temporary loss-making phase. For many producers, the peak production months are precisely when a disproportionate share of annual income should be earned. Instead, too many farmers are working hard only to lose money or, at best, break even.

“This is the reality in Ireland, but it is also the reality for dairy farmers in many other parts of Europe. There has been some marginal and tentative price recovery in certain markets, but it remains well short of what is needed to provide a sustainable margin. Without action to rebalance the dairy market, many producers will remain trapped in a situation where the market price does not reflect the real cost of producing milk.

“A voluntary supply reduction scheme is a tried-and-tested instrument that has already shown it can address oversupply without relying on storage and without creating an overhang that would later threaten market recovery. The voluntary supply reduction measure introduced in 2016 proved its worth. By signalling a reduction in supply, it encouraged buyers to buy forward and helped trigger a recovery in milk prices, thereby stabilising primary production.

“At a time when the agri-food sector is facing many serious and complex challenges, policy-makers should at least act where proven tools already exist. The dairy market urgently needs balance, and dairy farmers need prices that cover their costs. A European voluntary supply reduction scheme would be a practical, modest and effective step in that direction. National governments and the European Commission should now show the political will to use it,” he concludes.