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MILK-NEWS

http://www.europeanmilkboard.org

Newsletter as PDF

download here a pdf version

Contact

European Milk Board
Rue du Commerce 124
B-1000 Brussels

Phone: 0032/2808/1935
Fax: 0032/2808/8265

E-Mail:   office@europeanmilkboard.org
Website: http://www.europeanmilkboard.org

Newsletter as PDF

PDF-Version download here

Contact

EMB - European Milk Board asbl
Rue de la Loi 155
B-1040 Bruxelles

Phone: +32 - 2808 - 1935
Fax:     +32 - 2808 - 8265

office@europeanmilkboard.org
www.europeanmilkboard.org

Dear Dairy Farmers and Interested Parties,

The major Milk Conference in Brussels, being held on 24 September and chaired by the European Commissioner for Agriculture Dacian Ciolos, represents a potentially big step for the milk sector in Europe. During this important conference, the European Commission will present the results of research into the milk market and the dairy sector aspects after 2015. This will be a notable opportunity for dialogue with the EU institutions, where crucial decisions for the future of the dairy sector and our farms will be discussed.

The EMB will take advantage of this conference and put forward its proposal for a flexible EU milk supply management system. In the last few months, especially from last November, with great strength and determination we have carried out a big lobbying campaign through historical demonstrations, like those in Berlin and Brussels.

During the conference we will be able to explain to the EU institutions the EMB project in view of the abolition of milk quotas in 2015. The aim of our project will be the establishment of a monitoring agency - equally representing producers, consumers, retailers and industry. The monitoring agency will ensure cost-covering milk prices and help avoid a further dairy market crisis in the EU. We cannot accept the current rules that kill producers and make them lose money by producing milk, as in the last thirty years.

Romuald Schaber, the EMB President, will present our proposal at the conference, drawn up with the assistance of academics. The EMB will be the only milk producer association taking part in the conference and having the opportunity to reveal its study results and proposals for the future of the sector.

This is a significant moment for all of us that can motivate us to stay together. That is the only way to make the EMB, a structure created to protect the interests of milk producers, part of the European context.

Roberto Cavaliere (Member of the EMB Board)

Appeal from Belgium to think and act

It is no disgrace to point out that although the price paid for milk is currently a little better it still isn’t enough: in this respect one need only recall the independent study of the cost situation of milk production in Germany that proved a milk price of 50 cents necessary for a cost-covering income. The so-called milk marker index (MMI) based on the study results comes to the same conclusion.

The crisis now affecting the egg sector, for instance, vividly shows us precisely the fate that undoubtedly awaits us, i.e. a situation of overproduction in which the price of eggs paid to the producer covers just half of the production costs.

read more...

Interview about milk production cost surveys

In the interview below, Dr. Karin Jürgens from the Büro für Agrarsoziologie & Landwirtschaft (Agro-sociological and agricultural studies office, BAL) in Germany, already commissioned by the EMB and allied organisations to produce two studies on the costs of milk production in Germany and France, answers questions on the background to and specific criteria of these milk cost surveys.

How were the production costs worked out, and on what basis?

The substantial basis for working out the production costs is the farms’ accounting data gathered by the European Union, known as the FADN data.

read more...

Norwegian milk market regulation

Norwegian milk production is characterised by a long established market regulation system. The aim is to adjust production to market demand in order to ensure a predictable price for the producer and provide a stable supply for the consumer. There is also a strong policy to maintain milk production in all areas despite large climatic and topographical variations.

There is a farmer-owned co-operative called Tine responsible for regulating the milk market in Norway. Tine distributes 95% and processes 80% of all milk produced in Norway.

read more...

French farmers’ association: People in glass houses shouldn’t throw stones

On 1 August Lactalis, a major French dairy group, wrote a letter to all its milk producers.

The letter was drawn up as a reply to some farmers having demonstrated in July in front of the dairy’s company signs and product displays. In its letter Lactalis calls the farmers’ behaviour inappropriate and without any legitimacy. The demonstrators, the letter says, were undoubtedly members of the French farmers’ association FNSEA and the majority of them supplied other dairies, primarily co-operatives, in which they not only were members but often had leading roles.

read more...

Milk Marker Index (MMI) indicates slight increase of milk production costs

The current results of the Milk Marker Index for milk production costs in Germany, published by the German MEG Milch Board at the beginning of September, show a slight rise in costs of about 1 cent/kg milk for the month of April. The current value of the Milk Marker Index amounts to 116 (2009=100). Compared to the January value of 113 it thus rose by 3 points.

read more...

EMB Calendar

Please find below some of the most important events in September 2013:

  • 4.09.:  Hearing in the European Parliament on price volatility in agricultural markets in Brussels

  • 5.09.:  Board meeting in Brussels

  • 17.09.:  Meetings with the cabinet of the EU Commissioner for Agriculture and MEPs in Brussels

  • 24.09.:  Milk conference of the European Commission in Brussels

read more...

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Full Texts

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Appeal from Belgium to think and act

It is no disgrace to point out that although the price paid for milk is currently a little better it still isn’t enough: in this respect one need only recall the independent study of the cost situation of milk production in Germany that proved a milk price of 50 cents necessary for a cost-covering income. The so-called milk marker index (MMI) based on the study results comes to the same conclusion.

The crisis now affecting the egg sector, for instance, vividly shows us precisely the fate that undoubtedly awaits us, i.e. a situation of overproduction in which the price of eggs paid to the producer covers just half of the production costs. The opening of the markets to countries in which environmental, animal welfare and social standards cannot be compared to ours makes matters even worse.

There is discussion in Europe at the moment of the transatlantic free trade agreements that entail the risk of the United States flooding Europe with milk and meat produced by the labour of exploited Mexican workers under the harshest conditions. On top of that there is the crisis of thousands of billions of euros that went down the drain because of dubious speculation by the banks which the politicians now want us to pay for through endless austerity programmes – without having ever asked us beforehand. In the end the only people profiting from this system is one per cent of our society and the far too many politicians who are themselves incapable of tightening their own belts.

However, we must not lose sight of the fact that we are not the only ones in this situation. In Belgium alone we just have to look around to see Caterpillar, Ford, Arcelor-Mittal – the entire production sector that is suffering. That is why we farmers have joined forces with other sectors and civil society and formed the D19-20 alliance to fight for our common future. Every organisation that wishes to join us is more than welcome.

We call on everyone to support us by adding their signature: go to the http://www.d19-20.be/fr/onderschrijf-de-oproep/ website. There you will find all the key information on gatherings and campaigns of action planned.

Join us: we’re counting on you!

Alain Minet (MIG)

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Interview about milk production cost surveys

In the interview below, Dr. Karin Jürgens from the Büro für Agrarsoziologie & Landwirtschaft (Agro-sociological and agricultural studies office, BAL) in Germany, already commissioned by the EMB and allied organisations to produce two studies on the costs of milk production in Germany and France, answers questions on the background to and specific criteria of these milk cost surveys.

How were the production costs worked out, and on what basis?

The substantial basis for working out the production costs is the farms’ accounting data gathered by the European Union, known as the FADN data. What is important is that these farms’ accounting data are officially collected and fed into a common pan-European data network. We specifically selected these data because they are representative and officially recognised, as well as subject to quality control by the European Union.

What are the specific features of these cost studies and how do they differ from other agricultural cost surveys?

From many years of experience I can say that the database used is the broadest of its kind available for recording milk production costs. It’s a key difference from previous standard farming sector analyses carried out by private consulting firms or agricultural administrators like the chambers of agriculture. These are usually based merely on a few farms surveyed in a specific region, generally sizeable farms, and not on a random sample. That is why the data are not representative.

Even if the FADN data are sometimes criticised for recording only the larger farms or those where farming is the only activity, the selection is in fact comprehensive enough to compare the milk production costs of farms of varying size in different regions.

Did the study results surprise you?

What surprised me about the cost study in Germany was that the results show scarcely any difference between milk production costs in regions with relatively large farms, like the East German Bundesländer of Thuringia and Brandenburg, and regions with mostly smaller farms. This is chiefly due to very high wage costs on those farms.

And when farm size categories within a region are compared there are hardly any cost differences in paid costs, i.e. the production-related costs of feed, seed, buildings and machinery. Apart from the input and machinery costs, the small farms can therefore produce at similar costs to those of larger farms.

Otherwise the study results both in Germany and France confirmed the loss-making cost situation in milk production long criticised by farmers. An analysis of the results makes it quite clear that there are significant location-specific differences in the costs of milk production between different regions, such as coastal locations and mountain regions. Unfortunately these differences have so far not been sufficiently balanced out by political instruments like the compensatory allowance for disadvantaged areas.

So far Germany and France have been studied. Can the study be extended to other countries as well?

Yes, we’re doing that already. The next cost survey is planned for the EU member states the Netherlands and Italy as well as Switzerland, which has a similar farm accounting data network. As the accounting data of every EU member state are collected through the FADN, the studies can be extended without a problem. This is only one side of the coin, though. The second and equally important strategy is to update the studies regularly. For Germany we have already published several quarterly updates using the Milk Marker Index.

Regardless of whether we are conducting a new survey or updating costs, the crucial factor is invariably the trusting collaboration and in-depth discussion of the methods and results with the farmers from the respective countries as the experts and partners on the ground.

Christian Schnier (EMB)

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Norwegian milk market regulation

Norwegian milk production is characterised by a long established market regulation system. The aim is to adjust production to market demand in order to ensure a predictable price for the producer and provide a stable supply for the consumer. There is also a strong policy to maintain milk production in all areas despite large climatic and topographical variations.

There is a farmer-owned co-operative called Tine responsible for regulating the milk market in Norway. Tine distributes 95% and processes 80% of all milk produced in Norway. Even though it is the government that defines the measures in the market regulation system, Tine is responsible for carrying out the necessary actions:

  • Milk quotas: Each producer has a permanent quota and a levy is imposed if production exceeds the given amount. The quotas are raised proportionally if there is a shortfall in the market. The quotas are privately tradable, but in the event of a sale at least 50% has to be sold to the government. In the event of overproduction, the government can choose not to sell purchased quotas in order to tighten production. 

  • Price equalisation: The farm gate price is the same all over the country, and different costs associated with different distances (from farm to dairy) do not affect the price paid to the producer. To compensate for differences in production costs, a multi-level subsidy is paid by the government per litre of milk, where the rate is higher in less favoured areas in terms of milk production.

  • Obtaining duty: Tine is obliged to obtain milk from every producer who holds a quota, regardless of the size or the geographical location of the farm.

  • Supply duty: Tine is obliged to supply other Norwegian companies which process more than a certain amount of milk every year with raw milk on equal conditions and at equal prices.

  • Storage/export: Tine is responsible for storage or exports of any surplus goods such as cheese, butter or milk powder. This is financed by a sales tax (2 cents per litre) paid by the producers.

There are annual negotiations between NB and NBS, the two Norwegian farmers’ unions, and the government regarding the financial and economic framework in the agricultural sector for the following year. In these negotiations the players agree on a target milk price that works as a guideline for the producer price. Tine is responsible for regulating the market in a way that this target price can be realised. This target price also functions as an upper limit, and the market must be opened for more imports if the actual price exceeds the target price for more than two weeks.

Elin Bergerud (EMB)

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French farmers’ association: People in glass houses shouldn’t throw stones

On 1 August Lactalis, a major French dairy group, wrote a letter to all its milk producers.

The letter was drawn up as a reply to some farmers having demonstrated in July in front of the dairy’s company signs and product displays. In its letter Lactalis calls the farmers’ behaviour inappropriate and without any legitimacy. The demonstrators, the letter says, were undoubtedly members of the French farmers’ association FNSEA and the majority of them supplied other dairies, primarily co-operatives, in which they not only were members but often had leading roles.

In the letter the Lactalis private dairy points out that it pays the producers more than the industry average for their milk and therefore remunerates its milk producers better than numerous dairy co-operatives. The latter were, it says, content to pay the minimum that resulted from bargaining in the French dairy sector, although it was the milk producers themselves who ran them.

Lactalis calls on the French farmers’ association FNSEA to remain independent and concentrate on taking care of its own affairs instead of making others look bad: especially because it was certainly easier to blockade production sites or delivery vehicles if their own milk and dairy was not affected.

The OPL, one of the two EMB member organisations in France, emphasises that it was certainly not the first time the farmers’ association FNSEA – the association of co-operatives – had undertaken such targeted demonstrations.

It would be much more constructive if the association were to identify with the EMB’s aims to achieve regulation in European milk production and milk markets. The challenges are formidable and a decision must be taken now!

Nicolas Coudray (OPL)

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Milk Marker Index (MMI) indicates slight increase of milk production costs

The current results of the Milk Marker Index for milk production costs in Germany, published by the German MEG Milch Board at the beginning of September, show a slight rise in costs of about 1 cent/kg milk for the month of April. The current value of the Milk Marker Index amounts to 116 (2009=100). Compared to the January value of 113 it thus rose by 3 points. As between January and April 2013 the average milk price in Germany only increased insignificantly from 34,95 to 35,25 cents/kg milk, the gap between the total cost of milk production (i.e. cash costs plus remuneration minus subsidies) and the milk price stayed almost the same.

The price-cost ratio, i.e. the relation between the farm gate price of milk and the total cost of milk production, indicates a slight decrease from 0,84 to 0,82. With -18% the shortfall between prices and costs still remains significant.

When determining the Milk Marker Index for April 2013, for the first time an update of the costs for other specific costs was carried out. This update is based on the data of the farm accounting data network of the German Ministry of Agriculture. The update was carried out for the specific costs for plant and animal production, paid work, depreciation, wages, rental charges, interests and taxes for the year 2011. So far the figures used for these cost items were based on the 2009 data of the EU Farm Accountancy Data Network (FADN).

Ute Zöllner (MEG Milch Board)

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EMB Calendar

Please find below some of the most important events in September 2013:

  • 4.09.:  Hearing in the European Parliament on price volatility in agricultural markets in Brussels

  • 5.09.:  Board meeting in Brussels

  • 17.09.:  Meetings with the cabinet of the EU Commissioner for Agriculture and MEPs in Brussels

  • 24.09.:  Milk conference of the European Commission in Brussels

Impressum

European Milk Board asbl
Rue de la Loi 155
B-1040 Bruxelles
Phone: +32 2808 1935
Fax: +32 2808 8265
E-Mail: office@europeanmilkboard.org
Website: http://www.europeanmilkboard.org