EU auditors have hit out at the transferring of cows between herds while farmers were getting paid to cut milk supplies under a 2016 EU scheme.
The EU introduced over €360m of supports for dairy farmers during the 2014-16 milk market disturbances.
However, in a new report, the European Court of Auditors (ECA) has said the EU did not sufficiently assess producers’ needs and said the aid granted was not targeted enough.
In September 2016, €150m EU voluntary milk supply management scheme was announced.
Farmers wishing to reduce production in a three-month period were able to do so and receive EU aid to the value of approximately 14 cents/litre.
Almost 5,000 Irish farmers signed up to the scheme for a proposed reduction of over 70m litres. Indeed, Ireland was the member state with the highest participation rate among milk producers at 24pc.
However, EU auditors hit out at the effectiveness of the scheme, highlighting that it did not prohibit farmers from transferring their herds to other holdings, where they could continue to produce milk.
In these cases, the aid generated no effect on the market, as overall production stayed the same.
It cited one case it examined in Ireland involving an applicant who “decreased” milk deliveries by transferring around 200 cows, along with a lease on its milking facilities and land, to another farmer, who continued to deliver milk from those cows during the reduction period.
The auditors also said the reduction period for the voluntary production reduction scheme (October 2016 to January 2017) came after the milk price had started to recover in August 2016.
They said milk production had already been decreasing since June 2016 as a reaction to historically low prices.
Between June and September 2016, milk deliveries decreased by around 1m tonnes compared to 2015, a volume exceeding the reductions supported by the voluntary reduction measure.
“It is therefore highly likely that some producers supported would have reduced production anyway,” the auditors said.
The auditors also said that while the high quantities of Skimmed Milk Powder bought-in under public intervention managed to smooth the price decline, it also weighed on the SMP market balance and contributed to delay its price recovery.
Nikolaos Milionis, member of the ECA responsible for the report, said the EU must be better prepared in the future to respond more efficiently to potential crises in the dairy sector.