Thursday

20th Sep 2018

Why are European farmers unhappy?

  • How much are you willing to pay? It influences how much farmers receive for their products (Photo: EUobserver)

What do Vladimir Putin, drought, a viral disease and supermarkets have in common?

They are all factors that have to some degree contributed to the current state of agriculture in Europe - the topic of a special meeting of EU farm ministers on Monday (7 September) in Brussels.

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  • Russia's food ban is affecting prices (Photo: kremlin.ru)

Several thousand farmers are expected to protest in the EU capital while ministers discuss possible aid measures with EU commissioner Jyrki Katainen, who is filling in for hospitalised farm commissioner Phil Hogan.

The demonstration follows a summer of protests in several European countries, notably French farmers who disrupted traffic at the height of the tourist season.

But the causes of the current situation, which some call a crisis, are myriad – and it is not only the French farmers who have it bad.

Russia

One of the reasons for the farmers' malaise is geopolitics.

Following Russia's annexation of Crimea and support of separatists in eastern Ukraine, the EU imposed sanctions on several top officials. Russian President Vladimir Putin responded with an embargo on European dairy products, fruit, vegetables, pig meat, bovine meat, and poultry meat.

Initially, the damage was limited. Since the Russian ban was put in place in August 2014 the European “agri-food” sector has managed to compensate the losses to the Russian market by exporting elsewhere. In June, food exports were 11 percent higher than a year earlier.

However, such aggregate figures mask local and individual worries.

“We’re fighting for survival”, a Latvian farmer told news website Marketplace recently.

EU commissioner Hogan said recently that “particularly the Baltic States and the new member states” are hit hardest.

And with Putin having announced the ban should continue until August 2016, other countries have also complained.

Austria and Belgium, for example, have noted that the ban has affected their pig meat producers, while Bulgaria, the Czech Republic, Hungary, Poland, Romania, Slovakia and Slovenia recently urged the commission “to use all possibilities to stabilise the situation on the milk market”.

Milk quota

However, one option - reintroducing milk quotas - is off the table, Hogan has already said.

Part of the fall in the milk price was to be expected. The EU's three-decades-old milk quota ended in April 2015.

In January 2014, European farmers were paid an average of €0.40 per litre of milk. A year-and-a-half later, that price had dropped by 10 cents.

The drop was not uniform across Europe though.

French farmers experienced a drop from €0.39 (January 2014) to €0.30 (June 2015), but prices for milk are now lowest in the Baltic states: around €0.21 per litre in Lithuania and Latvia, and €0.23 in Estonia.

Therefore the price the French farmers received in June is “reasonable”, Hogan noted.

And with milk production increasing by 4.5 percent in 2014, “farmers themselves probably contributed to the particular glut that we have in milk at the moment”, Hogan noted.

Many farmers anticipated the end of the cap on how much milk they were allowed to produce, and started to increase their production – which has in part caused the drop in prices.

So farmers are also to blame for the price drop, but only collectively. Individual farmers obviously faced a prisoner's dilemma: do I also increase production and possibly help cause a surplus, or stay behind with the same amount to sell for a lower price?

Drought and disease

Other reasons contributing to price slumps are lower-than-expected demands in China, and a change in consumption patterns in Europe.

However, there are also several local factors contributing to sector-specific problems. Some of them will be discussed by ministers in Brussels on Monday.

Poland and Romania, for example, are suffering the consequences of a severe drought.

The Polish representative will tell his colleagues that his country expects a 25 percent drop in the average farmer household income as a result.

A position paper said that Poland will note “drought is a frequent occurrence, yet this year’s drought that took place during the summer vegetation season, is particularly severe. The drought covered almost the entire territory of the country”.

Meanwhile, Poland and the Baltic states are also suffering from an outbreak of African swine fever while Greek farmers are seeing several tax and other benefits disappear as part of a package of required measures in exchange for their country's international bailout.

Your fault too?

Part of the problem however, also lies with the general consumer.

That is to say, people who do not want to pay more for their groceries than they do now.

According to a July report by Begbies Traynor, UK “food suppliers and farmers are increasingly being squeezed by the supermarket price war”.

One farmer told the Guardian that he and his colleagues are scared.

"The supermarkets say, ‘You can’t match the price? Sorry, we’re going elsewhere.’", he said.

And then there is the complaint by French farmers that they are unable to compete with workers from eastern European countries.

The agriculture ministers have scheduled three hours and fifteen minutes on Monday to discuss all of these problems, and possible solutions. It's clear that a lot of factors are beyond their control.

EU says milk price still 'reasonable'

EU farm chief said there are “limitations” to what commission can do to help farmers hit by low milk prices and the Russia food ban.

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