A FURTHER European dairy package, while likely to offer short term support, is unlikely to be the ‘silver bullet’ needed to balance markets and drive up prices.

That was the warning from a joint meeting of dairy representatives from the UK's farming unions, responding to the announcement that farm commissioner Phil Hogan will table further EU-wide dairy support measures on July 18, possibly with an element of supply management.

NFU Scotland’s milk policy manager George Jamieson said: “We must wait and see what Mr Hogan has to offer but this belated effort from the Commission is unlikely to be ‘the silver bullet’.

“Frustratingly, at a European level, we have been involved for months in debate regarding appropriate support measures for the dairy sector. Agreement on where funding should come from and how it can be best utilised has been hard to nail down.

“There is no doubt that dairy has needed help for many months now, and Hogan’s commitment to a package has been too long in coming. Regardless of the terms, its scale is unlikely to be significant in comparison to the losses dairy farmers have been exposed to for almost two years," said Mr Jamieson

“The debate on supply management at a European level has failed to generate any coherent plan and provide any assurance that it would have the desired effect of balancing markets and driving up prices. There is a strong argument that supply management now may actually do more harm than good as production in Europe and beyond is declining and markets are slowly starting to turn.

“NFU Scotland’s milk committee has discussed supply management options at length and although we have agreed that balancing supply with demand is very desirable, we can see no reliable policy to deliver this, given the global and even regional variables," he said.

“We will have to wait and see what the package options are and how much money is available. For hard working dairy farmers, it is unlikely that ‘business changing’ sums are involved. The current situation in Scotland’s dairy sector remains dire with an alarming number of dairy producers continuing to face prolonged losses. Although markets are turning, they remain some substantial distance from a return to profitability.

“This is global issue, but the Commission, and both UK and Scottish governments have been slow in accepting the scale of the problems. The priority, short term, is to support dairy farming businesses through the next year. The cash flow, and net worth of many are seriously challenged and while this package may offer some help, it is unlikely to be of a scale to resolve this.

“Of benefit would be new ‘financial instruments’ which would offer dairy farmers, their banking creditors and the supply chain some assurance that their business plans are sustainable," he added. "NFUS continues to meet with banks and government to develop sensible long term planning and support for producers and are pressing processors and retailers to react urgently to the changing market signals and raise prices without delay."