April 22, 2020

 

New report warns over 10,000 jobs at risk in EU's dairy industry

 

 

As a result of COVID-19, more than 10,000 jobs and EUR2.2 billion worth of dairy output could be lost by the EU's milk processing sector, according to an analysis by EY.

 

The report, which was commissioned by Dairy Industry Ireland (DII), found that the loss of a small number of 150 key workers across the milk processing industry could lead to major disruption.

 

EY said a 20% fall in dairy output as a result of the pandemic would result in a EUR2.2 billion loss for sector and could cost 10,700 jobs.

 

The study also found that a 10%-20% cut in milk prices as a result of the market disturbance would result in a reduction in annual payments to farmers of up to EUR840 million.

 

Dairy commodity markets have taken a serious hit over the last month as a result of lockdown across Europe due to the COVID-19 pandemic. This has effectively shut down food-service sector demand.

 

Butter and skim milk powder (SMP) prices have collapsed as a result, with butter falling from a high of EUR3,400/tonne in early March to EUR2,550/tonne this week, while SMP dropped from EUR2,500/tonne to EUR1,850/tonne.

 

Irish processors pulled milk prices for March by 2 cents per litre as a consequence of the deteriorating market sentiment, and have warned that further cuts will follow unless international demand improves.

 

The EY report found that EUR550 million could be required by co-ops and dairy companies to cater for increased stockholding and other requirements.

 

Meanwhile, the EU's 27 agriculture ministers have called for a co-ordinated action by the Commission to alleviate the crisis in farming across Europe.

 

It is understood Private Storage Aids and exception aid for farmers could be introduced.

 

Minister for Agriculture, Michael Creed, said he was hopeful the initiative would lead to "decisive action" by the Commission.