Not the answer

The Pine Hill Dairy has described yesterday’s $1.5 million short term government subsidy to milk producers as failing to address the real problem facing the industry.

Chief Executive Officer of the PHD, Richard Cozier, told Barbados TODAY this morning, that it’s like giving a man a fish, rather than teaching him how to fish.

Before handing over the cheques yesterday to the dairy farmers, Acting Permanent Secretary in the Ministry of Agriculture, Lennox Chandler, admitted that the money to the 18 milk producers, ranging in value of between $60,000 and $100,000, was only a short-term measure, aimed at avoiding a possible decimation of the sector and the ruin of small producers who have been struggling to survive as a result of the high cost of doing business.

But Cozier explained that discussions have been ongoing at various levels over the past six to seven months between Government, processors and producers on a restructuring plan for the entire industry, aimed at correcting the root of the problem – pricing/costs on all sides.

He said no progress had been made on that plan, which not only envisages the establishment of a board to oversee the working relationship between all the stakeholders, but also the introduction of a “permanent” subsidy that should allow local milk producers to be more competitive and cost effective.

The Pine Hill Dairy boss noted that such a plan would not only benefit the farmers, but the processors and consumers.

Competing with imported products

“All (milk producing) countries, except New Zealand, have subsidies. It is difficult for local farmers to compete with the cheaper imported produce which benefit from subsidies. Subsidies would help farmers to produce their milk at lower costs, which in turn would allow the dairy to get it at a reduced price from the farmers and the dairy would be able to get it to shelves at a reduced price to consumers,” argued Cozier.

The executive expressed fears for the future of the farmers after the “temporary” Government aid has been exhausted in short order.

“Are they (Government) going to come back in another six months with more money? We can’t sustain this. We are giving a man a fish, instead of teaching him how to fish. I hope we can get back to the plan for the broader benefits of the industry,” Cozier urged.

He observed that “everyone” was now in a different mode and there was “no rush” to sit down and discuss this issue.

“I hope,” the PHD chief added, “we can meet next week (after general elections) and discuss the restructuring of the dairy industry where we can have a properly constructed board to merge the processors and producers, with the ultimate goal of having a lower cost (to all).”

Cozier explained that the current 25 per cent milk quota to farmers implemented in September 2006, reflected the demand for local fresh pasturised milk at that time, but reasoned that the market dynamics had changed in 2013 where consumers had wider choices and cheaper options.

He said the dairy could no longer continue to absorb the cost of delivering milk to the market under the existing pricing structure and if it could not get a pricing break from the farmer or aid from Government over the next six months, it may have to increase the price of milk to consumers.

The CEO revealed that of the two and a half million to three million litres of milk produced by farmers up to January 4, only 4,000 litres had been dumped, and “considering the circumstances, that is very good”.

He reported that the dairy was not making “any money” from milk and its losses of $6 million in 2011 and $4 million in 2012, were unsustainable.

Producers have already lamented their possible demise if “the dairy’s talk” of cutting their quotas by 42 per cent this year, was implemented. (EJ)††††

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