Sunday

21st Jul 2019

Brussels set to rule out milk quota changes

  • In May, some 1,000 farmers gathered in front of the EU headquarters to protest the falling milk prices (Photo: EUobserver)

The European Commission is refusing to bow to demands by farmers to cut milk quotas and is instead set to investigate whether big retailers are abusing their market power over farmers and processors.

Recent months have seen several EU capitals filled with dairy farmers protesting milk prices which have halved since 2007 and are now at a record low. Farmers say that cutting quotas would boost prices, with the average price at 24 cents a litre - approximately 16 cents less than it used to be.

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But the EU's executive body appears reluctant to yield to pressure by farmers.

According to a report to be unveiled on Wednesday (22 July), seen by EUobserver, Brussels is set to "exclude ideas such as a five percent quota reduction or a freeze on quota increases" as it would slow down the envisaged reform of the sector.

"Putting this policy into doubt would only create uncertainty, delay the restructuring process and render no service to the many dairy producers," reads the document to be presented by EU agriculture commissioner Mariann Fischer Boel.

The EU agreed last year that production ceilings would increase by one percent each year until they are completely scrapped in 2015. Currently, total milk production stands at some four percent below the overall quota as the demand for milk has weakened both in the EU and on the world market.

Ms Fischer Boel in May argued that "what farmers need to do is produce less because there's a lower demand" - an unpopular opinion in agricultural circles.

According to Romuald Schaber, the head of the European Milk Board, it is "incomprehensible to see such rigidity" on the side of the commission.

Speaking to AFP (21 July), Mr Schaber suggested setting up "voluntary production limits." "It would cost three times less than to leave things as they are today, producing a surplus that has to be bought artificially and then put into storage after," he added.

Farmers prices versus consumer prices

The European Commission claims that to date it has adopted rescue measures - such as export refunds or intervention buying of butter and skim milk powder - to the tune of €350 million. The possibility of digging deeper into EU coffers in 2010-2011 seems "quite limited," it says.

But it indicates it wants to fight low milk prices by shedding more light on price transmission between producers, processors and retailers. "A permanent Europe-wide system for monitoring food prices could be set up," the commission paper says.

According to one Czech farmer speaking to journalists during the June protest in Luxembourg (22 June), "It is necessary to find a European solution to the problem."

"The supermarkets must be leashed if we want to avoid someone firing another salvo from Aurora," he added referring to the cruiser Aurora that signalled start of the 1917 Russian Revolution.

The commission's data suggest that the prices of milk and dairy commodities have largely dropped since the end of 2007 - for example by 39 percent for butter or by 31 percent for milk. On the other hand, the consumers have seen only a slight price decline of some two percent.

"Even if milk is only one of the costs in the consumer price of dairy products, the magnitude and asymmetry in the downward adjustment of dairy consumer prices clearly shows that the EU dairy supply chain does not function efficiently," the report says.

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