The dairy market interbranch organisation (IP Lait) is in charge of the dairy market. But it has not even managed to uphold its own Rules of Procedure. Despite its sizeable membership fee (average of 2,290 francs per year and dairy farm or a total of 23.15 million per year), the organisation meant to uphold the interests of Swiss dairy farmers (Swiss Milk Producers' (SMP) or Swissmilk) is unable to get milk prices to rise although the current butter shortage should, as such, lead to an increase.

The average price currently paid to milk producers covers less than half their production costs. According to Agridea, the production costs in valley areas were 1.09 francs in 2019. Furthermore, the SMP is a member of the interbranch organisation for butter (with a 34% stake) and has, in this capacity, purchased the import rights for the first 1000 tonnes of butter. How can they possibly defend milk producer interests under these conditions? This is a major conflict of interest that calls into question any real protection of milk producers! Are the heads of our regional organisations like Prolait and the Central Switzerland Milk Producers (ZMP) actually upholding the interests of their members? Are they impartial?

This difficult situation has lasted too long and has destroyed the Swiss dairy sector. Disgusted and exhausted, producers in this sector are renouncing milk production, one after the other (1995: 44,360 milk producers in Switzerland; 2019: 19,048 = -57% in 25 years). The opening of the "white line" (= waiving customs duties) is very close to becoming a reality. The butter import requests in quick succession are clear proof – a new import request for 1800 tonnes of butter was submitted by IP Lait and was accepted by the Federal Office for Agriculture (FOAG) on 11 August. Enough is enough!

We demand:

• A complete overhaul of the interbranch organisation and its functioning, using well-functioning interbranch organisations as the example to follow (e.g. the Gruyère interbranch organisation).
• Membership fees defined by SMP and indexed as per the farm-gate price and delegates that truly represent their base, WITHOUT DUAL ROLES, and with a limit on term of office.
• The abolishment of regional organisations, as they have no reason to exist without national milk pooling and real independence.
• An immediate increase in the milk price: we demand a milk price that covers production costs and not a pathetic, ridiculous price increase like the one announced by certain processors at the beginning of July (an additional 0.6 to 1 centime per litre of milk). What an insult!
• The abolishment of Segment B milk and the (illegal!) cheese bonus paid for this segment.
• The implementation of a law that makes it compulsory for certain products to be bought only at cost-covering prices, so that wholesalers stop price dumping, where producers bear the brunt and processors remain constantly under pressure. It is inadmissible for milk to be cheaper than water!

The current butter shortage illustrates the dysfunction of the dairy sector! Inadequate milk prices mean fewer producers, i.e. less milk production and, on top of that, less value creation for the milk producers. To our fellow milk producers who have seen their income dwindle over the last 30 years (from a guaranteed price of 1.07 francs to an average price of 55 centimes today): isn't it high time to demand a true defence of our interests in exchange for our membership fees?

Extract from a press release by Uniterre on 13 August 2020

Production costs of 60.29 cents per kilogram of organic milk and an average organic milk price of 47.40 cents: in other words, cost coverage of only 79 percent. These are the findings of the latest study on the cost of producing organic milk in Germany conducted by the Office for Rural Sociology and Agriculture (BAL, Büro für Agrarsoziologie und Landwirtschaft) and commissioned by the European Milk Board (EMB), the German dairy farmers’ association (BDM) and the MEG Milk Board. This study also takes into account a fair income for producers. The figures revealed by this study clearly show that organic milk producers too are selling their products at a loss.

Here are some impressions from Klaus Vetter, an organic farmer from Hesse, who was part of the working group set up as part of the study.

Mr Vetter, what are your takeaways from participating in the working group?

Participating in the study was a very enriching experience. The most exciting aspect was to see how it has a direct link to the reality of running a farm. As a farmer, this is especially important for me. Every organic farmer can use the results as a kind of yardstick for his farm.

Did the result get you thinking?

Most definitely! Even though the results did not really surprise me. These figures should motivate us organic farmers to take action because we are going head-first into the same situation that we wanted to get out of. For the organic sector to be sustainable, our farms must remain economically viable over time. We should not lose sight of the losses recorded on each and every milk statement. These losses were, to a large extent, covered by our families in the form of unpaid work. This has to get you thinking!

As an organic farmer, how will you be able to use this study?

One thing we did not have was concrete figures. Once it came to light in January 2009 that Lidl and Bioland had reached a marketing agreement, it was already clear to me that we organic farmers had to create a counterweight. For this, we need to present a united approach. The basis of such an approach is uniform price demands. Thanks to this study, we now have a solid reference to do just that.

So, what’s the next step?

As I see it, we have one more task as organic farmers: pooling organic milk in an organic milk producers’ organisation. This producer organisation should operate across Germany – or better yet, across Europe – and should be the interlocutor upstream of the dairies. It should set prices and, if necessary, regulate volumes in order to avoid overproduction. Thanks to this study, we can now state what a fair price would be – our production costs. Now all that's left to do is to convince our colleagues that we need a strong producer organisation – as I see it, there is no way around it. Let's make it happen!

Mr Vetter, thank you for speaking with us.

You can find further information about the cost of organic milk production in Germany in this brochure in German (English version available soon):

http://www.europeanmilkboard.org/en/milk-production-costs.html

Astrid Sauvage, European Milk Board

The UK government imposed a lockdown, including the closure of all hospitality outlets on 23 March 2020, after the rise of the COVID-19 pandemic. While, at the time, milk production was rising by around 1% per week, there was a loss in demand, estimated at 2 million litres per day. Retail demand rose but did not fully compensate for the closure of food service outlets.

Spot milk prices fell to a low of 8 pence per litre in the week beginning 6 April. 5,200 out of 9,200 estimated farmers in Great Britain have suffered a milk price reduction, ranging from 0.5 to 4 pence per litre and higher. In addition, nearly 500 farms had milk collections cancelled, 500 had payments deferred, 2,200 have been asked to reduce milk output and 700 have had the volume they get paid a full price on reduced.

Farmers in England and Wales, who had a drop of at least 25% in the average farmgate milk price between February and April, will have access to a hardship fund. 30 June, when the EU Commission’s private storage aid scheme closed, the UK had entered 4,499 tonnes of cheese (100% of its allocation) and 1,695 tonnes of butter. It did not make use of a subsidised storage of skimmed milk powder.

A curb in milk production occurred in Great Britain due to the actions taken by farmers in April and May in response to the requests by processors to reduce production. Milk production had returned to normal levels by the end of July. Wholesale milk prices recovered partially and farm-gate milk prices increased to a level which reversed the price drops in April and May. Nevertheless, market recovery remains quite fragile and the UK dairy industry still faces the challenges of COVID-19, Brexit and relatively poor forage stocks due to the bouts of dry weather.

Patty Clayton, Lead Analyst, Agriculture and Horticulture Development Board (AHDB) and Tim Hartl, EMB

August on Irish dairy farms is a time when farmers are preparing for the autumn and winter ahead. This involves preparing enough grass for paddocks in late autumn, cutting any excess grass for silage and reseeding any old pastures.

The breeding season has finished and has been successful for most around the country. Bills incurred during the spring for fertilizer and concentrates would normally be paid and farmers look at high rows of silage bales and full silage pits to feed cows over the winter. Grass is plentiful at present and despite the drought in the high dairy production areas of South, East and Midlands of Ireland in early summer. This drought is now long forgotten as rain has flowed continually since the start of June. It has been a very good year for grass growth in general which is the most important element of the spring grass-based production model in Ireland.

However, 2020 has been a tough year in terms of Covid-19 with the worry of milk collection, milk price and health at the forefront of everyone’s mind. Restrictions have eased around the country but with cases starting to increase there is a fear that those restrictions might be reimposed countrywide. Agricultural shows have also been cancelled around Ireland which were always a reprieve from farm work.

The milk price is currently around 30 to 32 cents per litre. Supply from our system based on grass production has increased in 2020 by 3.5% (year to end of June) above 2019 levels.

Paul Smyth, Irish Creamery Milk Suppliers' Association (ICMSA)