Food supply chain is top priority during Covid-19 pandemic

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IFA

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IFA has put a detailed set of proposals to the Government and the EU Commission in response to the COVID-19 pandemic. It is an unprecedented threat on a global scale.

It’s recognised that keeping the food supply chain moving as freely as possible is a top priority in managing the crisis, second only to the operation of the medical services.

There has been a phenomenal response at local, community and sectoral level to keep the food chain moving. Everybody has stepped up and I want to acknowledge the commitment shown by so many.

Urgent action is required from Government and the EU Commission in keeping the farming and food sector operational; in keeping markets and labour channels open; and assisting the agri-food sector in keeping food on the shelves at this critical time.

All agricultural sectors that are affected will need direct government and EU financial support, and access to low-cost finance.

The beef sector has been hit very hard with prices falling and farmers finding it difficult to sell cattle. The Government and the EU Commission must act swiftly and introduce emergency measures, which are available under the Common Agriculture Policy, to support farmers with direct payments for price related market losses.

COVID-19 has caused major market closures and disruptions. The restaurant and food service sector are practically closed everywhere. This has hit our export orientated beef sector extremely hard. While retail demand has increased, processors are reporting prices for steaks down 40% to 60% compared to 2019.

At farm level beef price quotes from the factories have fallen by 15/20c/kg in the last two weeks. This is a price reduction of €70/€80 per head at a time when producers were already losing money.

Market supports may have to be utilised to support specific products/parts of the market.

With the collapse in the steak market due to COVID-19, the EU Commission should move to protect the EU markets and prices, and suspend all non-EU beef imports.

The Irish dairy sector’s grass-fed production model is one of the most sustainable in the world, and it exports over €4bn worth of dairy products to over 120 countries every year.

With a small domestic market, the sector’s focus is on exports of ingredients and commodities, many of them high-value. The sector is uniquely affected by the impact on global food markets of the COVID-19 pandemic.

The seasonality of our production system means that the next three to four months are critical to the volumes produced and the incomes of farmers.

Already, we have seen a significant weakening of some dairy commodity prices, with returns from the main EU commodities slipping by around 2.8c/l or 9% in the last two months.

While milk prices have not yet come back to reflect the impact on commodity prices – Irish milk purchasers are unique in setting prices the month after milk has been produced - further pressure is expected due to trade disruption and COVID-19 related global demand reduction.

Irish milk production reaches peak at mid-May, with milk volumes building between now and then. Co-ops, are generally mindful of their farmer shareholders’ interests, but will need to adjust milk prices to reflect losses from the market impact. It is therefore essential that this impact would be minimised.

IFA believes a properly designed, promptly implemented Aid to Private Storage (APS) scheme would provide the best suited support for the dairy sector in the face of market disturbances caused by COVID-19, while also facilitating a prompt market recovery after the pandemic crisis comes to an end.

On the sheep sector, the COVID-19 crisis is having a very severe impact with the loss of major market segments and price down as much as €1/kg or up to €23 per lamb at farm level.

IFA is proposing EU action in the form of direct payment aid, market supports, suspension of non-EU imports and promotions.

The main priority must be to keep the pig sector operational and keep routes to markets open. With five pig processing sites having a 92% share of the slaughtering capacity, the industry cannot cope with a closure, however temporary, of any sites.

We have also raised issues in the tillage, horticulture and aquaculture sectors.

IFA has proposed the Government and the EU Commission must work with the European Investment Bank, and the Strategic Banking Corporation of Ireland, to address working capital difficulties by providing low-cost loans to farmers, in particular low-cost term loan products.