Farm ministers want action to tackle milk crisis

BRUSSELS - A group of 16 EU member states, led by heavyweights France and Germany, on Monday (7 September) insisted that the bloc take urgent action to come to the rescue of dairy farmers bludgeoned by what the European Commission has termed the 'milk crisis'.

At the end of a meeting of EU agriculture ministers, 16 of the EU's 27 states put out a statement demanding additional financial supports, describing the current emergency measures in place as inadequate.

"The existing measures have simply helped prevent a further collapse of the markets," said the pack of countries, comprising Austria, Belgium, Bulgaria, Estonia, Finland, France, Hungary, Ireland, Latvia, Lithuania, Luxembourg, Portugal, Romania, Slovakia and Slovenia.

"But they are not sufficient to improve the situation farms are facing. In order to prevent a disappearance of farms on a grand scale, the EU must take strong and concrete new measures."

Since a peak in milk prices mid-2008, world markets have seen a marked decline. A recent sharp drop of some 40 percent has pushed milk prices to their 1992 levels. This plunge will have robbed European dairy producers of some €10 billion by the end of the year, according to Copa and Cogeca, the European farmers' associations.

The collapse in prices has dominated discussion amongst EU farm ministers for much of the last year, and the current meeting of the council of agriculture ministers was pushed forward from the end of September as a result of the urgency of the situation.

On Monday, the ministers met in Brussels to decide what action to take in reaction to the price concerns while outside, hundreds of Belgian farmers demonstrated calling for more help from European governments, saying that without more aid, milk farmers will be driven to bankruptcy.

Padraig Walshe, president of Copa, told the Swedish president of the council of farm ministers: "We are facing a European problem, and only a common European action will help us overcome it."

In July, the EU's executive, the European Commission, presented its suggestions for the sector, recommending a range of support measures such as government aid, funds channelled through the EU's rural development programme, and actions to reduce what it calls "anti-competitive" practices across the food production sector.

The commission did not however back the idea of pulling back from plans to gradually reduce milk quotas by one percent a year and ultimately eliminating them altogether in 2015.

The decision to do away with such supports was reached by EU member states in 2008 as part of a so-called health check - or review - of Europe's Common Agricultural Policy, the bloc's system of farming supports.

In July, the commission already announced it would allow direct payments to farmers to be paid early, funds to cover the cost of storage and launched a new round of dairy promotion programmes like the pre-existing European school milk scheme, which stimulates demand.

At the time of the announcement of the fresh measures, agriculture commissioner Mariann Fischer Boel said: "We have to do all we can to help our milk producers, who are having to deal with a dramatic fall in prices," adding however: "We will not reverse our policy of gently phasing out quotas. Putting this into doubt would only create uncertainty and would do nothing to help the situation anyway."

Possible supplementary measures could include an increase in direct payments to farmers to €15,000 over three years, up from €7,500. Another option would be to impose a levy on those farmers that exceed their quota. This then could finance voluntary retirement from the sector, although reportedly few nations back this idea.

Prices on the rise

While French agriculture minister Bruno Le Maire has said he does not back a return to milk quotas, member states that favour more robust intervention do want to see bigger quantities of butter and skimmed milk powder bought up by member states to stabilise prices, higher export refunds (monies given to exporters when selling on to markets where prices are lower than in Europe) and a range of market support measures.

They also favour at least a postponement of the milk quota abolition.

Many countries are also reportedly backing funds for the storage of cheese, with Italy strongly backing such a move.

"Everybody backs milk in schools," said one diplomat. And, despite the surface divisions, he added, "Most states recognise the problem and want something done."

Meanwhile, Ms Fischer Boel noted that milk prices may already be seeing something of a turn-around, rising slightly in Italy, the Netherlands, and Northern Ireland.

This week, a 24 percent increase in the price of milk powder was reported by Fronterra, the co-operative that accounts for over a third of the international dairy trade, at its most recent auction.