The continued growth of Irish milk production may ultimately lead to a blockade of Irish dairy products by British farmers.
That's according to Barry Wilson, editor-owner of the UK-based Dairy Industry Newsletter, who said last year's abolition of milk quotas by the EU happened at exactly the wrong time.
"The Irish dairy industry, among others, decided to invest heavily towards the end of the quotas, ignoring the fact that if production increases prices would go through the floor.
“I think you Irish should take a major share of responsibility [for the crash in farm gate milk price]: you may be a small milk-producing country but you are accounting for a lot of the increased milk production right across Europe. And you’re not intending to do anything about it at all."
Wilson said that contrary to what dairy cooperatives were doing in many EU countries to curtail output, some Irish dairy cooperatives are still incentivizing production.
"If you guys in Ireland keep on expanding as fast as you’re doing, you could be going to war with British farmers, as so much of your exports come to the UK.
"You could be crashing markets in the UK and there could be crowds of farmers blocking the boats from Dublin. It has happened before.”
Wilson added that reduction of milk supply across the EU will mean “boom times” for the Irish dairy industry.
Dual pricing system in operation across EU
Last week, French Agriculture Minister Stéphane Le Foll met with significant players in the French dairy sector to consider how to implement newly-agreed EU milk supply control measures.
It is understood that key Member States and EU officials met last week to flesh out the implementation of the new measures.
However, Wilson said that Le Foll's request for such a milk supply control measure is confined to cooperatives, whose presence in France is probably lower than anywhere else in Europe.
“Whereas 100% of milk is controlled by coops in Ireland, I think it’s about 35% in France. I don’t know how it will work but I think the whole point is that France wants central funding.
However, he said he is aware of dairy companies in France, Holland, USA and UK implementing the dual-pricing system in order to cut-back on production.
"The largest French company, Sodiaal, is already implementing an A & B milk price system, but won’t divulge how much is being paid for the B price."
He said the present milk price situation in the UK is “quite extraordinary,” with the government saying it wants a free market for everyone.
“The British government can say 'hand on heart, we believe in the free market’ but the free market is that B milk is paid a hell of a lot less than A milk ... UK dairy companies are now implementing the most draconian disincentives for farmers," Wilson said.
He added that not all UK milk companies are operating such a dual-pricing system but major companies such as First Milk, Meadow Ingredients, Payne's Dairies and Dairy Crest do so. However, companies do not reveal what their B price is.
“So it’s creeping in and I think a lot of smaller companies are doing it too but are not saying anything about it.”
He anticipated this will cause a "dramatic reduction" in milk production in the UK after this summer.