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A milk crisis on the horizon

1 February 2018

All indicators foresee new milk surplus which will once again hit all producers. This milk crisis will jeopardize their existence and will make transmission to young generations harder and even impossible. All kinds of farms will be impacted. The ones which will be hit the hardest will be young farmers and large farms heavily indebted.

All indicators foresee new milk surplus which will once again hit all producers. This milk crisis will jeopardize their existence and will make transmission to young generations harder and even impossible. All kinds of farms will be impacted. The ones which will be hit the hardest will be young farmers and large farms heavily indebted.   This crisis will trigger new incommensurable family tragedies. In the end, it will also threaten our territories and food dependency while solutions exist!   All big EU milk producing countries have renewed their herds of livestock, which are significantly increasing. The cumulative increase between January and September 2017 amounts to +/- 0.4%. If one compares September 2016 to September 2017, Germany registers an increase of 81.000 tons, France 65, Ireland 63, Poland 44, Denmark 38, the United Kingdom 32, Belgium 24, Spain 22, Italy 19, Austria 16, Romania 9, and the Netherlands, Bulgaria and Czech Republic show an increase of 7.000 tons. The cumulative increase for the EU reached +/- 439.000 tons  (source MMO, November 28th 2017). This increase will last at least until the beginning of the summer 2018. But let's take a closer look at the figures: between the end of 2016 and the beginning of 2017, +/- 48.000 producers participated in the EU voluntary reduction scheme. Their production decreased by 834.000 tons. Nevertheless, in the course of the following months, the production was on the rise again...   On top of that, all world exporting countries are experiencing an increase of their production. For 2018, the US forecasts an increase of +/- 1.4%. +/- 2.7% for New Zealand for the month of October, + 6.7% for Australia from July to October. And + 2% for Latin America, a region coming back on the world market.   Powder milk stocks continue to be like a millstone around the neck of the EU, which amount to 350.000 tons. Butter prices peaked this summer, which drove milk price up. But since October, prices are free falling. Butter price decreased from 677€/100kg in September to 496,74€/100kg at the beginning of December and 471,10€/100kg at the end of December.   Producers must be understood. Even in good times, many have no choice but to produce more to pay back the debt they accumulated over the last two years. Of course, other factors explain why the current production is rising: good quality fodder harvest this summer has favored a good yield for each cow, as well as the impact of a new generation of heifers, which has raised yields.   If this year follows the same logic, price should collapse next spring. However, if we act now, the situation can be rectified.   How? By activating instruments to regulate future surpluses in case of crisis. These instruments were suggested to the Commission which discarded them. They were indeed not mentioned in the Omnibus regulation voted in November. The EU is once again promoting the Milk Package based exclusively on producer organisations (PO), but it is a well-known fact that PO have no say neither on volumes nor on prices.   The Commission does not learn from the past crisis. It does not react to families' suffering, to breeders committing suicide, to the disinterest of the youth in farming because of the lack of good income and decent living prospects. The Commission is adopting a head-in-the-sand policy by ignoring those issues.   The Commission's priorities are favoring exports outside of the European borders, new free trade agreements and continued growth in market shares. And to reach those objectives, it is necessary to pay low prices to the actors at the start of the food chain, the producers. This is an untenable policy. It gives rise to a volatility of prices, unmanageable both for the incumbent producers as well as future generations interested in farming. The lack of a long term vision is leading to grassland desertification. It is utter nonsense, ignoring the crucial role played by small and medium-sized farms for the environment and employment.   The Commission turns a deaf ear to producers and citizens' multiple warnings but remains entirely at the disposal of the industry and large-scale distribution.   Yes, we must avoid a new crisis by making regulation our priority, by ensuring the profitability of a multitude of human-scaled farms whose goal is to feed the European population, by supporting the grazing of cows throughout all territories. Without grazing, there is no milk!   So let us dare promote Food Sovereignty here in the EU and all around the world.   Yes, the European Commission should base its policies on indicators taking into account production costs, including labor. Indicators should also take into account sustainable development, climate agreements, agriculture models ensuring a decent living for farmers through guaranteed profitability on the long term. These more autonomous and cost-effective models already exist and are embodied by resilient farms.   Yes, the Commission must take back control and adopt the necessary regulation instead of letting it all depend on “the invisible hand” to control the market.   Yes, the Commission must consider indexing milk prices on all milk-based end products and not only on butter and powder milk, which only account for 25 % of all milk-based end products.   We are now left hoping that the powder milk-based infant formula contamination (infected with salmonella) will not break the relationship of trust with our importers, most of them Chinese. This would indeed cause a significant slowdown of our exports. This last milk crisis reminds us that pinning most hopes on exports makes us vulnerable. It proves that the large-scale milk industry does not necessarily guarantee food security.   It is urgent for the EU to learn from past crises and to act on the recommendations of the European Committee of the Regions promoting market regulation. May the EU and all political authorities have the capacity to assess the challenges that our region approaches on the horizon.   Henri Lecloux – Mouvement Action Paysanne (MAP)   January 2018