Despite recent dairy price increases, a capricious system governed by speculators and unpredictable market swings remains unchanged. To guarantee food safety and security, as well as a fair income for farmers, the Fair Milk alternative should become the norm.

A lot is made of the pernicious effect of the Russian war against Ukraine on dairy prices in Europe. However, the current bout of inflation had already started rearing its head in the fourth quarter of 2021. Actual shortages resulting from the conflict can only partly account for the rise in costs rippling through global supply chains. Speculators are largely responsible for the situation on the market since their activities adversely affect producers as well as consumers. While higher food prices may be hard to stomach for consumers in the North, in the global South, their activities, siphoning off money to a handful of traders and companies, wreak havoc on populations who are already experiencing food insecurity.

Mirror clauses

At the macro-economic scale, it is governments’ laissez-faire trade policies, leaving the supply of vital commodities to markets, that have led us down the current path. In pursuit of shareholder dividends, European producers have been substituted by ever cheaper produce. While dairy farmers in the EU must meet stringent standards, global players rarely comply with the same food safety, social, and environmental standards. There is simply too little control over the quality of imports and production methods as regards animal welfare or the carbon footprint. When it comes to tackling ecological concerns, like excessive nitrogen or methane emissions, measures cannot be simply imposed on farmers unilaterally without consulting them, especially if these additional constraints are not reflected in farm-gate prices. As long as this will be the case, mirror clauses should be enforced so that European farmers are not undercut by products that do not meet the same stringent social, ecological and quality standards – something the EMB has been calling for persistently.

"We can’t afford to feed you anymore"

Unable to compete on price, Europe’s farmers are throwing in the towel at an unprecedented rate. Between 2003 and 2016, the number of farms in the EU-27 decreased from about 15 to 10 million (-32%). The smallest farms (<5 ha) are seeing the largest decrease (-38%). I remember a banner put up by dairy farmers from Northern Ireland at one of our demonstrations in Brussels, which read: "We can't afford to feed you anymore." The EU has become so dependent on global players that the slightest hiccup, or indeed an acutely inflamed appendix such as the Russian invasion of Ukraine, means a trip to the ER.

Dr. Karin Jürgens from the Rural Sociology and Agriculture Studies Office (BAL) conducted a study on margins, and several more on the cost situation of dairy farmers, which has systematically worsened over the last decades. Small dairy farms are the worst hit. Even those who are doing well are unable to obtain funding to make the necessary investments, for example, to help them keep up with increasingly stringent regulations. They are told that their farm lacks scale. Banks turn their noses up at them, saying: “Your farm is no longer future-proof.”

Across the global South, as land falls fallow, dairy cows are being slaughtered, and livelihoods destroyed. Threatened by famine, people would rather opt for a perilous journey north, where they are headed for an uncertain future, than face certain death at home. On the way, they risk falling prey to smugglers, having their mere existence considered a nuisance.

A higher standard

Slowly but surely, concern about dairy farmer attrition is growing among policy-makers. Today, food security is on the agenda like never before. So far, however, barely any concrete measures – if any at all - have been considered to remedy the situation, especially because farmers are not given a say in the policy discussions on this problem. We propose that Fair Milk become the standard. DG AGRI would do well to replicate the Fair Milk approach and apply it to the whole of the EU. Farmers elsewhere could also benefit from this, as the FaireFaso label in Burkina Faso and a similar initiative in Mali have shown.

Market Responsibility Programme

Since the 1950s, Canada has had a system in place that coordinates supply and demand so that stable prices can be set for consumers and farmers. In a tripartite approach, involving the government, the industry and farmers on an equal footing, they agree on a just price for milk. In the Netherlands, this is called the ‘three-legged stool’ approach, referring to the ones farmers used to sit on to milk their cows. Such a system is possible, provided markets are no longer regarded as a sacred cow.

The Market Responsibility Programme (MRP) proposed by the EMB to counter overproduction crises uses a cost calculation developed by Dr. Karin Jürgens as a starting point, ensuring that a certain price range is maintained. Whenever the actual price would leave this range, some aspects of the MRP, such as a voluntary reduction scheme, would be activated to ensure the price returns to the stable corridor.

Think global, trade local

Agriculture is too vital a sector to be left to speculators whose interests simply do not align with those of dairy farmers or consumers. In fact, agriculture should be taken out of the global free trade framework of the World Trade Organisation. At the end of the day, policy-makers have a simple choice to make and they should be clear and honest about it: we can have sustainable agricultural production, or we can have global markets where only the cheapest products are considered competitive; a race to the bottom where all but a handful of people lose. We cannot have both. Decades of mismanagement cannot be fixed overnight, but it is important to start the process as quickly as possible. Now would be a good time.

After many years of highly dedicated work for the EMB, Sieta van Keimpema will be leaving the EMB Executive Committee. She has been fighting for Europe's dairy farmers with much energy and effort. We deeply thank her for the exceptional work she has carried out for EMB farmers as member of the Executive Committee and as President.

Sieta van Keimpema, EMB Executive Committee 2006-2022 / EMB President 2020-2022

The job of a dairy farmer is multifaceted and demanding, and – as old hands in the business never tire of saying – can be very fulfilling. Yet anyone wanting to start producing milk faces huge challenges in every EU member state. Besides the intense price pressure and low or sometimes inexistent income for farmers and family members helping on the farm – a challenge every milk producer is confronted with – young farmers in particular also have to deal with the investment capital required.

Skyrocketing energy prices are leading to far-reaching consequences. For many months now, milk products have become steadily more expensive around the world. This could be because many food corporations are capitalising on the situation and are using the excuse of rising energy prices to expand their margins. At the same time, milk production worldwide is either stagnating or decreasing. Rising costs and milk prices that do not cover these costs are leading to more farms going out of business and a reduction in production volumes. Since the phase-out of quotas in 2009, the number of dairy farms in Switzerland has reduced by one third. Today, only about 18,000 remain.

A current study reveals the development in margins for EU milk producers and the fact that they have decreased significantly over the last 30 years, even sliding into negative figures to a large extent.

The study by the BAL (Büro für Agrarsoziologie und Landwirtschaft, Rural Sociology and Agriculture Studies Office) has calculated four types of margin for the EU for the period 1989-2019 respectively 2004-2019 with the gross and net margin and the net economic margin I and II, clearly indicating the development in dairy farming.

Some associations and companies keep trying to capitalise on market uncertainties to chip away at long-standing quality standards for agricultural products. The German small farmers’ association AbL calls for decent producer prices in the face of higher costs.

Our Fair Milk programme members introduce themselves: the Ströbele family from Ehingen in Baden-Württemberg has farmed for over 200 years. Together with his wife and his three sons Lukas, Felix and Fabian, Gernot Ströbele runs his farm with 65 dairy cows and young cattle.

We farmers are committed to climate protection because we are directly affected by the fallout of climate change. There are many different ways to mitigate climate change. When looking at greenhouse gas reduction in dairy farming, case-by-case evaluation is essential as carbon emissions strongly depend on the location, structure and type of farm and use. Dairy farming is not per se a climate killer as is often claimed.