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What future for milk ?

14 April 2010

After the conference held on the 26th of March, the dairy crisis is still on-going: the European Union must satisfy the expectations of both producers and society.

What future for milk ? After the conference held on the 26th of March, the dairy crisis is still on-going: the European Union must satisfy the expectations of both producers and society. The future does not lie in either futures market or the world market or indeed in restructuring the dairy sector. On the contrary, answers can only be found by regulating of both production and the market. The production of milk also needs to be sustainable and based on the use of European animal fodder. The conference on milk held on the 26th of March organized by the European Commission, in conjunction with the High Level Experts Group of the 27 Member States allowed many stakeholders, including the European Coordination Via Campesina (ECVC), to have their say. The 27 Member States, the European Commission and the European Parliament (who is responsible for the joint decision-making process) must now take responsibility for resolving the dairy crisis. Why should the European dairy policy depend on a very limited world market? Why persist in exporting milk powder and butter? P. Vavra (OECD) noted that the so-called world market is very marginal, and represents less than 10% of production. Nevertheless, on Friday, the European Commission reaffirmed its priority of "competitiveness" of the dairy industry on the world market, without being able to justify this to either producers or taxpayers. Without export subsidies and decoupled direct aid, the E.U. would not be able to export its surplus milk powder and butter. Moreover producing milk from South American soybeans, evaporating it to turn it into powdered milk, and then exporting it to other countries at the expense of the taxpayers, is neither sustainable nor legitimate. Milk quotas are not the cause of an 80% decrease in the number of producers since 1984. The E.U. has never, that is to say has not yet started to deal with the real causes of the milk surplus that occurred in the decades 1970 and1980. Quotas just limited the surplus, but they were set at a level well above European demand. This kept the prices low and was one of the causes of the loss of 80% of dairy farms. Although Dacian Ciolos was correct in saying on the 26th of March that quotas have not prevented the decline in the number of dairy farmers, this does not mean that they are the cause. It is rather the way they were implemented by Member States and the Commission (European quotas set too high, market value assigned to the quotas...) that contributed to the concentration of intensive milk production. However, there are many other factors such as the policy of the dairy industries, more intensive farming practice, the absence of tariffs on imported animal feed, the introduction of norms of production adapted to intensive farming, etc... The Commission would do better to take responsibility for its ideological stance against the regulation of production rather than blaming the quotas for all the problems! Volatile prices are not a fatality, they are the result of a choice With all due respect to Mr. Van Driel (DG AGRI) who believes that a safety net preventing the price of milk from falling to the world price level is sufficient, the increased volatility of prices is linked to the deregulation of markets and is incompatible with sound agricultural economy, especially in the animal production sector. Setting prices well below production costs, and increasing the EU quota to reduce its value by 2015 can only be considered as irresponsible, even as criminal, when we consider how many farmers committed suicide last year. Domestic demand for dairy products is relatively stable; volatile milk price is primarily due to the fact that the E.U. has opted for a dairy policy that makes the European market dependent on international market fluctuations, even though only involves a very small part of the production. It is not the world market price – indeed a price for the trade of market surplus - that should be the price reference, but rather the average costs required for the sustainable production of milk. Contract farming would not be benefit producers As stated by Alison Burell (JRC, European Commission) contract farming does not empower farmers, nor will provide them with any guarantee of a fairer distribution of added value. Lidia Senra (ECVC) pointed out that any individual contract between a farmer and a dairy is meaningful only if there is a public supply management, and if prices are determined by collective bargaining that is based on the average production costs of sustainable production (including labour). Strengthening the bargaining power of farmers A. Burell pointed out that assessments carried out by the Commission on the current legislation of the fruit and vegetable sector, whose reform was based on the development of producer’s groups, demonstrate that these groups had no influence on the prices, fixed indeed by large retailing sector. The same happens in the United States, where there is a long tradition of co-operatives for bargaining power. DG Competition has suggested that some adjustments to the E.U. rules of competition are possible. As Lidia Senra stated, if there is no regulatory framework, dairy farmers will have no bargaining power. Now is not the time for creating cartels, be they composed of producers, processors, or distributors, it is the time for every actor in the chain to be paid a fair price that covers their costs, in full transparency. Go to www.eurovia.org to see our positions on the 2009 milk crisis and our position on the 3 high-level group hearings of the 27 Member States. Contacts Lidia Senra : + 34 609 84 5861 (ES-FR) Josian Palach : +33 671344902 (FR) Xavier Delwarte: +32 476 42 39 02 (FR-EN) Gérard Choplin (Bxl team): +32 (0) 473257378 (FR-EN-DE)

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