Key EU Member States and milk production nations Germany, France and Poland have agreed a common position on how to solve the ongoing difficulties in the dairy market.
The three nations, in particular, agreed on the need to establish a European financial incentive to encourage voluntary reduction of milk production.
To date, the European Commission has been adamant that EU funding would not be available to incentivise farmers to reduce production and Commissioner Phil Hogan recently said that he has exhausted all the tools available to him.
However, the move by the three nations yesterday has brought back into focus the possibility that the EU may activate the CAP Crisis Reserve which would reduce the EU payments of all farmers.
The agreement comes as EU Agriculture Ministers meet next week to consider how to solve ongoing difficulties in the dairy and pigmeat markets.
As part of the discussions in the run-up to the March Council of Agriculture Ministers, Ireland proposed a further deferral of superlevy payments to 2017 and 2018, to ease the financial burden on liable farmers in 2016.
The Minister for Agriculture, Michael Creed also raised the matter with Commissioner Phil Hogan, a recent bilateral meeting, as well as at the recent Council of Ministers meeting and encouraged him to reflect again on whether a legal basis could be found to facilitate a further deferral in superlevy repayments for farmers.
However, the European Commission advised that the legal basis for the Regulations underpinning the scheme are no longer in existence and therefore further amendments were not possible.
In recent weeks, Ireland again raised the matter with the Commission.
However, it is now understood that the view of the Commission’s legal services remains that there is no legal basis for any adjustment to the timelines provided for in the relevant regulations.
Meanwhile, milk production is likely to slow down in the key dairying regions for the rest of the year, according to new forecasts from the European Commission.
The revised forecasts put production for the nine months from Apr-Dec down 0.4% on 2015 volumes, a reduction of around 350m litres.