The deal on the CAP reform, which was officially adopted by the Council of Agriculture Ministers on 28 June, is an important step in the right direction, allowing for greater stability in different areas of the agricultural sector with its tool box of crisis instruments. However, it does not set forth any measures to ensure that costs for more sustainable production and producer prices actually go hand in hand.

Positive elements in the deal on the CAP reform

With the voluntary volume reduction crisis instrument (Article 219) as well as the Market Observatories and their functions (like providing information on market disturbances, production, stocks, prices and, where possible, margins) for different agricultural sectors (Article 222) included in the Common Market Organisation, there is now a legal framework for crises to be identified early on and the above-mentioned reduction programme to be activated in response – provided that the correct decisions are, in fact, taken in a timely fashion. This possibility to avoid surpluses and thus price collapses is a positive development. But these instruments must be used effectively and without delay in the face of crises! This is where the European Commission must play its part! A crisis mechanism that would automatically activate the appropriate crisis instrument is still missing. The capping of producers with surplus output during the period of voluntary volume reduction also did not make its way into the reform. Another positive element is the increase of the pooling threshold for dairy farmers to 4%, who together can thus negotiate or let negotiate for up to 4% of the EU milk volume. However, when looking at processors, this is still not enough. After all, you already have companies with a much higher market concentration, which makes it impossible for producers to negotiate on an equal footing.

Missing elements in the deal on the CAP reform

Costs in the milk production sector are not covered at present.* Prices and subsidies are unable to match costs. More demanding sustainability requirements entail higher costs as well. It will not be possible to cover this additional burden with raw milk prices nor through green subsidies. This is bad news for both experienced producers as well as young farmers. Even though they can be further supported through a mandatory minimum level of 3% direct payments, young farmers will continue to be the losers in the agricultural sector as long as the cost of more sustainable production is not actually covered by market prices.

The European Milk Board would like to thank everyone who has played their part in ensuring that the CAP deal includes important crisis instruments. We would like to expressly acknowledge the work done by the European Parliament as well as the many European dairy farmer organisations in this regard. However, for a truly sustainable policy, stakeholders like the European Commission and certain EU Member States must recognise the need for fairer prices and greater stability in the sector, and make efforts to achieve the same.
 
* A study with the latest cost data was published on 5 July. Please find the study here.

EMB press release of 30 June 2021

Aldi's “animal welfare pledge” has not only stirred things up in the meat market – it is now also being applied to milk products. This approach is being carefully monitored by the dairy industry. As of 2022, milk products will be labelled using a four-tier animal welfare hierarchy, as is already the case for fresh meat. This label aspires to become the standard.

According to the Lebensmittelzeitung (LZ) food magazine, dairies and milk producers expect food retailers to move away from animal welfare (AW) level 1 relatively quickly. Aldi and Rewe have announced that when it comes to fresh meat, they will only stock AW 3 and AW 4 products from 2030 onwards, and this will directly affect the dairy sector. After all, about 40% of beef comes from cows, which means that dairy farmers will have to adapt their animal husbandry methods as well. Corresponding criteria shall also apply for dairy products.

The retailers’ animal husbandry system has now become a kind of benchmark for animal welfare. “This has been proclaimed as a goal for the labelling of milk and dairy products as well. The animal husbandry system already includes criteria for the rearing of dairy cattle when the meat from these animals is to be labelled for the end consumer”, explains Robert Römer, director of animal welfare initiative ITW.

Animal welfare labelling system

Level 1 corresponds to the statutory minimum standards. This includes all beef cattle covered by QS certificates (editor's note: quality assurance system operated by associations) as well as dairy cows from the QM system (editor’s note: industry-driven quality system). Level 2 covers methods that go beyond the legal standards. Things like scratching brushes for dairy cows are compulsory. In Level 3, animals must have access to outdoor areas. Open-front stalls for cattle also qualify. In Level 4, pasture grazing during the growing season is a must. All the organic labels fall within this category. Auditing and monitoring of each animal husbandry method continues to be carried out by existing labelling bodies such as QM-Milch.

However, it is also important to keep in mind that the Borchert Commission is currently working on a much more differentiated catalogue of criteria, which go above and beyond the requirements outlined by retailers. The main differences concern tethering as well as space requirements in stalls, among others.

Dairies at the ready

Farmers are, of course, immediately wondering who will pay for these requirements and how much of those funds will actually reach dairy farmers. The additional one to two cents usually offered to date for outdoor access or grazing will definitely not be enough. Something closer to 6 to 8 cents per kg would be necessary, especially in light of today’s (low) milk price.

Matthias Bug, deputy chairman of the Hochwald dairy, believes that a price increment of up to 10 cents per kg for greater animal welfare is realistic. This would allow for cost coverage and would give farmers an incentive to stay in business in the first place. Bug’s first preference would be for this money to come from the market: “That is the safest way.” There has been no delay in farmers expressing their reservations about this approach. They believe that too much would be lost along the way from retailers through dairies to producers.

The Managing Director of Hochwald, Detlef Latka, also believes that the issue of funding still needs to be sorted out. According to Latka, a closed system from farmer via dairy and up to retailers would, nevertheless, be an opportunity to win back lost consumer confidence.

LZ reports that Schwarzwaldmilch is also preparing for stricter animal welfare requirements. The bonus for milk from pasture-fed cows has already been increased from 1.5 to 2 cents per kg as of July. At the same time, a phase-out of all-year tethering has also been adopted, albeit only by the end of 2029. A little over 100 of the 966 dairy farmers supplying Schwarzwaldmilch are affected by this change. However, they deliver just 5 to 6 percent of the total volume as most of them are older farmers with dairy farming as a sideline activity and a herd of just five to maximum 20 cows, says the dairy’s Managing Director Markus Schneider. He goes on to say that changing animal husbandry methods often ends up being economically inviable for them.

The Schwarzwaldmilch dairy will not lower milk payments, as Berchtesgadener Land and Hochland do to cover the costs of separate processing and accounting. Schneider says that there is nothing with which to reproach members who are rearing their cows in this way. In fact, the way they care for their small number of animals is often exemplary. That being said, he doubts that tethering will continue to exist for another nine years. The reservations about this practice within society and among policy-makers, associations and retailers are just too strong.

Hugo Gödde, first published on 12 July in AbL’s newsletter "Unabhängige Bauernstimme"