FARMERS HAVE known for a long time that markets are in trouble, but now it has been officially confirmed by the European Commission.

We all know the reasons, in the shape of the loss of major export markets and the complete wipe-out of the food service sector across Europe and globally. The result has been a plunge in prices for beef and milk. While Brussels has responded, there is no evidence what it is doing will deliver better prices. It may have some impact in preventing things getting even worse, but the solution lies in a return to normality and that is a distant prospect.

The Commission has introduced a private storage scheme for beef, dairy products and some lamb. This is about taking products off an over-supplied and weak market, in the hope that by the time they return, things will be better. This is common in the dairy sector, and €30 million has been put into private storage for butter, cheese and milk powders.

What is happening in the beef sector is more unusual and reflects the unique problems that sector is facing. Around €50 million has been made available and for the first time the target is the top end of the market, with storage focussed on steak and other expensive cuts.

This reflects market realities. There was a huge demand for mince as people stockpiled at the start of the crisis. That has now tailed off, but the big problem is that the market has disappeared for steaks and roast cuts. The demand drivers for these were hotels and restaurants, now all closed with no early prospect of re-opening. Roasts were the backbone of functions, including weddings, which have all been scrapped. They were also central to many family gatherings, but they too have fallen victim to the lock-down restrictions.

All agricultural markets are based around millions of small individual buying decisions, and in this case those are all negative. This is different to the dairy sector where the problems stem from a loss of export markets and a reduction in demand for many of the products for which milk powders are destined.

The amount the Commission has put into private storage is significant at €80 million, but realistically it is not enough to reverse fundamental market problems. The amount that would be needed to have a real impact is simply not available. The Commission actions are not much more than an attempt to head off criticism. At best they might stop things getting worse, but the problem with private storage is that it is time limited. The products in store could return to still weak markets or damage, in the late autumn, whatever level of recovery is being achieved.

Predictably the action by Brussels was dismissed as inadequate by many farm lobby organisations. But it is tempting to say in response, welcome to the new reality. The European Commission, for the foreseeable future, is not going to have the funds it would need to ride to the rescue when there are problems. Its income is linked to the economic activity of member states, and that will be falling for the foreseeable future. That means the EU budget will be falling when demand on it is rising. Farmers and others are going to have to live with the reality that the new game will be about allocating increasingly scarce financial resources.

Arguably this will not be an issue here, because of Brexit – but the same problems apply. The Treasury will be forced to find ways to rein in spending and there is less sympathy for farming in London than in Brussels and many EU-27 member state capitals. For now the UK can still use the EU private storage scheme, if it wishes to do so, but the more fundamental question is what the UK would do post-Brexit if confronted by beef and dairy markets in free-fall.

The €80 million from Brussels might look inadequate to the scale of the task, but would the Treasury in London commit the equivalent amount, around £10 million, in an emergency plan to help agriculture? Even before the post-coronavirus economic Armageddon that is looming, I think we all knew the answer would be no, or at best unlikely.

Brussels may be far from perfect, but it understands better than London that agricultural markets need to be managed, even if finances constrain how effective it can be in doing so.