flag de flag gb flag fr
Legal notice     European Milk Board ASBL | Rue de la Loi 155 | B-1040 Bruxelles

News Details

PDF-Icon Icon-Print

25.04.2018

High time for action against unfair competition in the dairy sector!

International Pooling Commission of Milk Producers calls for political intervention to create a functioning dairy market in 3-point position paper

(Paris, Brussels, Göttingen, 25 April 2018): If you are looking for an example of a well-functioning market, do not spend too much time on the dairy sector. Even the German competition authority, the Bundeskartellamt, recently concluded that this sector is subject to unfair competition, which continues to hamper the good functioning of the market.

The members of the International Pooling Commission of Milk Producers (IPCMP) have to face the problems resulting from such distortion of competition day after day. Far from being an issue in Germany alone, this is the case in many EU countries. Therefore, the IPCMP has drafted a 3-point position paper that calls on policy-makers and the processing industry to take the necessary steps to create a functioning market in the dairy sector.

 

The paper states that:

1.    Production costs must become the basis for the prices fixed in contracts between dairies and producers. In the current political-economic situation, the prices paid to consumers are not aligned with production costs (labour costs included). Even though they are the suppliers, producers have no way of determining the sales price. Against this background, contracts must at least guarantee cost-covering prices that consider real production costs.

A cost calculation study* developed together by the EMB and the MEG Milch Board provides some guidance in this regard and is already widely-used in the main producer countries in the EU.

 

2.    There must be a law preventing unfair competition at producer level. As is the case in trade, where products cannot be sold below cost price, selling raw milk or raw materials from the agricultural sector at a price that does not cover production costs should be prohibited.

 

3.    Political measures to promote the pooling of milk producers must be implemented. While the EU Milk Package has created the possibility of pooling (i.e. negotiating milk supply contracts for a large number of producers through producer organisations in order to strengthen the market position of producers), it has not really been possible to effectively use this provision to date.

 

What's wrong with the market?

Imagine that you are a car manufacturer and you must sell a new car for less than its production value because the market leaves you no other choice. The buyer simply pays you a price he decides himself and it covers only 80 percent of the production cost. Even though you are the manufacturer, you have no way of influencing this price. In order to absorb these losses, you do not pay yourself a wage and also use earnings from other activities to cross-subsidise your car manufacturing. This is the only way – otherwise you would have cars piling up and rusting away in your new car dump. Pure fiction? Sadly not, because this is similar to what is happening with milk. The average production costs in, for example, Germany, Belgium and France are slightly over 40 cents per litre. However, much less is paid to producers, with prices ranging from 29 to 35 cents in Germany, around 30 cents in France and even less than 30 cents per litre in Belgium. Labour costs, which amount to approximately 13-15 cents/litre, are simply eliminated from the equation as a result. It is not like this has been the case for a short period of time – something that one could cope with. No, prices have been below production costs for years now. Milk producers are often forced to raise funds through other activities in order to keep their milk production going.

As the IPCMP has stated, action is required at policy level when unfair trade practices become the norm. The IPCMP's paper on eliminating unfair competition in the dairy sector is addressed to national governments in the EU as well as to the European Commission and the European Parliament.

 

Background

As an international association of producer organisations within the European Milk Board (EMB), the International Pooling Commission of Milk Producers (IPCMP) is committed to creating better market conditions for milk producers in the EU. The participating organisations – MEG Milch Board from Germany, France MilkBoard that unites three French producer organisations, and MIG/WAFAB from Belgium – have signed a cooperation agreement, committing to regularly exchange information and to assist each other in issues related to milk pooling, as well as to organise joint actions and draft position papers.

 

*Current milk production costs for France (FR) are available here and for Germany here.

Position paper on eliminating unfair competition in the dairy sector

 

Press contacts:

Denis Jehannin – Vice-president of FMB Grand Ouest: +33 (0) 681 545 981
Alain Minet – Secretary-treasurer of WAFAB: +32 (0)470 47 33 40
Ute Zöllner – MEG Milch Board w. V:  +49 (0)551 50 76 49 11
Silvia Däberitz – Manager at EMB (FR, DE, EN): +32 (0) 2 808 1936


More News

06.12.2018

Eastern European milk producers together with EMB call on heads of state and government to establish fair EU conditions

Invitation to press conference and milk producer demonstration on 13 December 2018 in Brussels

30.11.2018

Newsletter November/December online!

In solidarity and with one voice The associations of the European Milk Board (EMB) held their Members' Assembly in the Black Forest ten days ago, where they discussed the current situation. Read more

27.11.2018

What's the matter with the dairy sector?

2013 – 2018: Realistic cost studies illustrate the true situation on the dairy market in the last 5 years

21.11.2018

European farmers show solidarity and speak with one voice:

"We call for a responsible dairy policy and an effective structure for the Common Agricultural Policy of the EU"

19.10.2018

Newsletter October online!

What is the cost of producing milk? In our sector, numerous spokespersons have the bad habit of taking the milk price as a starting point for looking at the dairy market. A short-sighted vision, because for dairy farmers the cost of production is as important as farm gate prices. In economic terms, it is impossible to consider...

15.10.2018

Milk production costs still not covered in Germany

(Brussels, 15/10/2018) The quarterly cost figures for Germany show that only 80% of production costs were covered in July 2018, while in April it was 78% and 88% in January. Production costs in July amounted to 43.28 cents; however, producers only received 34.56 cents for their product.Milk prices and production costs are still...

10.10.2018

Milk cost study shows: There is a gap between production costs and producer prices

Overview published with the latest figures from France, Germany, Denmark, Belgium, Luxembourg and the Netherlands

Displaying results
<< First < Previous 1-7 8-14 15-21 22-28 29-35 36-42 43-49 Next > Last >>