To ask the Minister of Agriculture and Rural Development, given the present difficulties being experienced by dairy farmers over market milk price volatility, how her Department is encouraging stakeholders to consider long term approaches such as hedging or insurance cover.

Following the 2003 EU CAP reform, milk price volatility was identified as an issue that our dairy industry would have to address. In the interim my Department’s dairy advisers have encouraged farmers to consider various matters that would help to mitigate risk. These include: an efficient production system linked to farm resources; business and financial management through benchmarking; prudent expenditure; a good cash flow plan covering all of the year; and hedging contracts for feed, fertiliser and milk supply.

I appreciate that hedging contracts and insurance cover are used by the dairy industry in other countries but so far there does not seem to have been an appetite by our industry to go down this road. However, I can advise that this matter is still on the table for consideration. I understand that hedging contracts were among the issues identified by the Agri-Food Strategy Board Dairy Sub-Group for consideration in the medium term. The members of this Group agreed that the industry needs to build resilience to cope with the peaks and troughs of the dairy market and flagged in Going for Growth the need for better integration along the supply chain and effective sharing and mitigation of risk. Hedging contracts would not, however, lead to an overall increase in the price received by farmers.

As this is a commercial matter you will appreciate that my Department cannot engage on discussions between individual milk purchasers and producers on taking this matter forward. This is something that only the various industry interests can do. Nevertheless, I do believe that it is something that individual milk producers may wish to explore further with their milk purchaser.