Study presents data about the organic milk sector, November 2020

According to the “Ökobarometer 2019” survey on organic food products conducted by the Federal Ministry of Food and Agriculture (BMEL), the demand for organic products from German consumers is constantly growing. Social standards and a fair income for producers are cited as additional reasons driving the decision to buy organic. But are these products really economically and socially sustainable?

As current calculations show, producers in Germany were paid an average 47.17 cents per kg of organic milk for the marketing year 2019/20. According to these calculations, however, the production costs amount to 64.63 cents per kg, when producers also receive fair remuneration for their work. Thus, producers were facing a cost shortfall of 17.46 cents per kg.

Over the fiveyears from 2014/15 to 2018/19, organic dairy farmers spent an average 51.70 cents exclusively on farming inputs and general operating costs without wages. This means that farm managers and their families were left with a mere 8.41 cents per kg of milk in hand as remuneration for their work. This corresponds to an hourly rate of about 7.62 euros and does not even come close to Germany’s statutory minimum wage. According to the cost forecast for 2019/20, the hourly wage this year would even be around seven euros per hour. This shows that organic milk cannot really be considered socially and economically sustainable.

The data on production costs in the German organic milk sector has been compiled by the BAL (German Office for Rural Sociology and Agriculture) and is updated every year.

However, the cost shortfall is not just an issue for producers in Germany, as Kjartan Poulsen, EMB Vice-President and organic dairy farmer in Outrup, Denmark, explains: “Like in the conventional sector, there is an increasing deficit between farm-gate price and production costs for organic milk in many European countries. It will be impossible to achieve the European Commission’s Green Deal objective – 25% organic farming by 2030 – with this ground reality. A significant increase in sustainable organic production in the EU can therefore only remain a pipe dream.”

Cost development and organic milk prices

The Milk Marker Index (MMI) for organic milk charts the evolution of organic milk production costs. For the marketing year 2019/20, the MMI for organic milk was 97, i.e. production costs for German organic milk producers reduced by three percent as compared to the reference year 2015/16 (2015/16 = 100). As compared to the previous year (2018/19), however, they increased by two percent.

Here you see the development of costs, prices and the MMI for organic milk over time.

Price/cost ratio (shortfall)

The price/cost ratio shows to what extent producer prices cover milk production costs on organic dairy farms. In the marketing year 2019/20, the milk price only covered 73% of their production costs; there was thus a shortfall of 27% or 17.46 cents per kg of organic milk.

Here you see the cost shortfall since the marketing year 2012/13.

Study on milk production costs in six key milk producing countries

Cost calculations are regularly carried out as an average of all dairy farms and are not limited to organic production. It is very clear that milk producers are not being paid cost-covering prices.
You can find milk production cost calculations for Belgium, Denmark, Germany, France, Luxembourg and the Netherlands for 2017 here.

A chronic shortfall between production costs and milk prices – what is the solution?

In order to counteract this chronic shortfall, the European Milk Board (EMB) calls for a statutory crisis instrument. The Market Responsibility Programme (MRP) observes and reacts to market signals, for example by temporarily adjusting production volumes in times of crisis.
You can find a short description of the EMB’s Market Responsibility Programme here.

Download data sheet here

EMB press release of 18 November 2020

In their year-end market data for 2019/2020, the German farmers' union DBV characterised 2019 as "an exceptional year for the dairy sector", February 2020

"On the one hand, raw milk production costs in many regions in Germany were significantly higher in 2018 and 2019 than in previous years because of the extremely hot and dry summers – and the associated poor feed harvests. On the other, producer prices in 2019 were extremely stable. The federal average through the course of the year oscillated minimally between 32.6 and 33.8 cents/kg."

According to Ottmar Ilchmann, dairy farmer and President of the German family farmers' association AbL in Lower Saxony, stability is generally understood as something positive. "However, when the DBV talks about 'extremely stable' milk prices while looking back at the past year, they definitely qualify as frontrunners in the contest for 'euphemism of the year'", explains Ilchmann, because this stability does nothing to improve the situation on dairy farms; in fact, it simply conceals the bitter truth. As Ilchmann puts it, these stable prices throughout the year also mean that the shortfall has consistently remained at about 10 cents or 25% below cost coverage levels – and this is something that the DBV chooses to give no mention. "These 'stable' prices imply extreme instability and pose an existential threat to farmers; further farm closures can be expected", says Ilchmann. In his opinion, if the DBV still saw itself as a representative of dairy farmers' interests, it should have capitalised on the opportunity to strengthen the market position of dairy farmers within the process of drawing up a dairy sector strategy. "It seems, however, that they are more concerned with upholding the interests of cooperative dairies, where their members, all too often, have a major say on executive and advisory boards", criticised the AbL regional president.

The dairy sector has been working on a "Sector Strategy 2030" for a while now. It was supposed to be presented in autumn 2019; however, there is still nothing on the table. The process is being led by a steering committee, which includes representatives from the DBV, the German Raiffeisen Association (DRV) and the Dairy Industry Association (MIV).

Article by FebL/Unabhängige Bauernstimme

Brussels, February 2020

Baltic farmers call on the EU to implement uniform direct payments for all. The European Milk Board also calls on all EU institutions to support the inclusion of an effective crisis instrument in the CAP.

For the Lithuanian dairy farmers' association (LPGA) as well as numerous other organisations from Lithuania, Latvia and Estonia, it is high time for an equal distribution of direct payments to become a part of the Common Agricultural Policy (CAP). At the protest, which is supported by the umbrella organisation European Milk Board (EMB), the Baltic producers are calling on the EU for fair and equal treatment. The European Milk Board also believes that farmers across the EU are being socially and economically left behind, especially due to recurring crises. Their request for the implementation of a functioning crisis management mechanism is directed not only at heads of state and government gathered today in Brussels, but also at all the EU institutions, as they are currently working on the CAP reform.

Same requirements but different direct payments

A number of different studies have shown that the EU milk price does not cover production costs. As long as this cost shortfall continues to prevail, producers remain dependent on subsidies. However, these subsidies vary from one Member State to the other, such that in 2017, Baltic farmers received only 54 to 60 percent of the EU average in direct payments. Jonas Vilionis, President of the Lithuanian dairy farmers' association LPGA, sees this unequal treatment as a major issue: "Direct payments are lower, but all products have to comply with the same requirements. Our farmers must comply with the same environmental protection, animal welfare and food safety standards as in other EU Member States, but without the equivalent compensation." This creates a divide between EU producers. Vilionis therefore calls for an equal distribution of direct payments. This would, however, only be possible with an appropriate CAP budget. Therefore, the EU agricultural budget should not be reduced in any way.

Cost-covering milk prices instead of subsidies

The European Milk Board, the umbrella organisation of European dairy farmers, also voices its opposition against this two-tier system. It highlights the need to reduce the dependence of farmers on subsidies to make a living. For Erwin Schöpges, President of the EMB, it is therefore important for agricultural income to be earned from the market in the medium term. "We need milk prices that cover production costs – including fair remuneration for farmers," says Schöpges.

More stable revenues with a crisis instrument in the Common Agricultural Policy

The constantly recurring crises, which lead to major losses for farmers, are a real burden in the dairy sector. The EMB, therefore, believes that a functioning crisis instrument like the Market Responsibility Programme (MRP), which would keep the dairy market in equilibrium and prevent drastic price reductions, is an absolute must within future agricultural legislation.

Sieta van Keimpema, EMB Vice-President, calls on the EU institutions like the Commission, the Council and Parliament to support the inclusion of an effective crisis instrument in the future Common Agricultural Policy. "Many EU policy-makers have seen the devastating consequences of recent crises with their own eyes. That is why truly important proposals and suggestions from policy-makers for such an instrument are now on the table. It is essential for the proposals like voluntary volume reduction with capping¹ during crises as well as temporary compulsory volume reduction² – during severe crises – to actually find their way into the CAP. This would provide the legal basis for quick reactions to market disturbances."

Treating EU farmers unfairly should no longer be business as usual: Baltic farmers should not be left behind as compared to their colleagues in the rest of the EU, just like farmers across the EU should not be left behind as compared to the rest of society. Today's protest is therefore an urgent call for fairness and equal treatment in the EU. The constructive proposals from dairy farmers show, furthermore, that such an approach is absolutely realistic.

Background: important crisis instruments for the CAP

Addressing the root cause of crises: addressing overproduction

¹ Voluntary volume reduction with capping: If the market is in crisis due to surplus production, the European Commission can call for a voluntary production reduction. Producers who reduce their production as compared to the same period of the previous year, and thus provide market relief, are paid a compensatory bonus. To ensure that these production cuts are sufficiently effective, all other producers should be subject to capping, i.e. for a certain period of time, no one should increase their production as compared to the same period of the previous year.

² Temporary compulsory volume reduction: In the case of severe market disturbances where voluntary volume reduction is not enough to rebalance the market, it should be possible to activate a compulsory volume reduction scheme for all producers. This would mean that all producers would have to reduce their production by 1 to 2 percent for a certain period of time. This reduction would be lifted after this period and producers would be free to revert back to their usual production volumes.

Please find here photos of the rally

EMB press release of 20 February 2020

YES to volume reduction – NO to private storage, May 2020

“We dairy farmers say YES to an EU-wide milk volume reduction scheme and NO to private storage for butter, milk powder and cheese as a crisis measure.”

While dairy farmers across Europe turn to the Commission and the EU Member States with this appeal, a thick fog of skimmed milk powder spreads over fields in numerous French departments. At the same time, a huge stack of milk powder reaches up to the sky in the German capital in front of the Federal Chancellery, and dairy farmers in Italy, Denmark, Lithuania, Luxembourg and Belgium use milk powder events to strongly demand appropriate crisis measures for the dairy sector.

According to Erwin Schöpges, Belgian dairy farmer and President of the European Milk Board (EMB), the many milk demonstrations send an important signal to policy-makers: “Skimmed milk powder has now become the EU-wide symbol for the misguided crisis measures implemented by the European Union in the dairy sector. These measures must take a different direction if they are to have any real effect in counteracting the crisis”, says Schöpges.

The coronavirus crisis has caused the demand for milk products to collapse. As EMB Executive Committee member Roberto Cavaliere reports from Italy, the shut-down of schools, kindergartens and public institutions, coupled with the almost complete standstill in the hospitality and catering sector, has led to a drastic reduction in the purchase of milk products. “We are currently producing way too much milk and this volume needs to be reduced EU-wide. We dairy farmers are ready to take on our share of the responsibility and participate in a volume reduction programme coordinated by the European Commission”, says Cavaliere. However, this is not what the EU is proposing. His colleague Boris Gondouin, who is a dairy farmer in France and an EMB Executive Committee member as well, is rightfully upset – like so many European dairy farmers – that the European Commission has decided to back subsidies for private storage. “These subsidies do absolutely nothing to change the difficult reality faced by dairy farmers during the coronavirus crisis. Especially milk prices for producers are falling. However, 30 million euros – as announced provisionally – are spent on subsidies for processed milk products and will go to the private industry. This means that the current EU measure was taken for the processing industry, not for the farmers.“ Johannes Pfaller, dairy farmer in Germany and EMB Executive Committee member, adds: “It is totally absurd to waste resources to make products for which there is no demand. Simply for these products to then be put into storage using subsidies.”

In order to manage the milk crisis: 

1. A crisis measure must directly address the milk volume.

2. The EU and its dairy farmers must take on shared responsibility. A programme that can be implemented in each and every EU Member State should be launched. Dairy farmers willing to reduce their production volume are then paid compensation through this EU programme for every litre of milk they do not produce.*

3. Stacks of butter and mountains of milk powder should not be allowed to pile up in the EU by subsidising the storage of processed products. Products in storage are still part of the available supply and therefore put pressure on milk prices. The announced 30 million euros would therefore be better spent on a volume reduction scheme rather than on private storage.

4. The EU should be willing to learn from its past mistakes. Private storage and the permission for producer organisations, interbranch organisations and others to reduce production regionally (rather than EU-wide) were completely ineffective as crisis instruments in 2015-2017. The EU volume reduction programme, on the other hand, was a success (details in study "Analysis of the EU volume reduction programme 2016/17").

* Detailed information in Market Responsibility Programme

As Danish dairy farmer and EMB Executive Committee member Kjartan Poulsen underlines, this is not the first time that the EU is choosing the wrong crisis management instrument. “Dairy farmers from the EMB and other associations highlighted the issue of massive stocks building up in storage back in 2017 with a large milk powder demonstration in Brussels. It is therefore our urgent appeal to the EU to stop using the instrument of intervention storage and to start working with dairy farmers so that we can implement a volume reduction programme together”, says Poulsen.
 
Today's Europe-wide milk powder demonstrations targeting the political sector will not be the last of their kind. Many German producers have already announced further demonstrations in the coming days.

Photos and videos of milk powder campaigns in Europe

EMB press release of 7 May 2020

Even though for us dairy farmers and our cows all 365 days of the year are about milk, 1 June – World Milk Day – is a special day for us. It is a day when we look ahead, with our vision for the future. We want to use this day to illustrate what makes a dairy sector good, fair, and both socially and environmentally sustainable. And to make it clear once again that the necessary framework conditions must be created by policy-makers: the 'Farm to Fork' strategy must be further improved.

The dairy sector is:

• fair when milk is a product that is sold at a cost-covering price; fair for those who work in the agricultural sector, when they are decently remunerated for their work;

• socially and environmentally sustainable when farmers employ environmentally sound production methods, and the costs of the same are covered by the price – these costs are thus not simply passed on to producers.

For Erwin Schöpges, President of the European Milk Board (EMB), these conditions are not utopic or some sort of pipe dream. They can be put in place if there is enough social and political will to do so. “In all parts of society, the desire for change, for a more reasonable and fairer way of living has become very strong. The COVID-19 crisis has clearly demonstrated, yet again, that we are all dependent on each other and how important essential workers are to our daily existence. They are just as important as a more judicious use of our natural resources. It is clear that something needs to change.” This social push for a more sustainable and responsible way of life and production is a driver that can, at the end of the day, lead the charge in ensuring that specific measures are put in place.

For the dairy sector, such measures should pay special attention to the following points:

The European Commission is currently trying to respond to the social call for more sustainability through the Green Deal and the 'Farm to Fork' strategy. “The fact that the Commission has reacted to such a call is definitely a good sign – for sustainable development in the EU and most definitely for their own political legitimacy as well”, says Erwin Schöpges. “However, in order to ensure greater sustainability, they have to get all those who will eventually be implementing their strategies on board. In the agricultural sector, this would specifically mean farmers.”

But before anything else, farmers first need a framework that would put an end to the exploitation they currently face. This means cost-covering prices, fair remuneration and a truly better position in the value chain. It is also extremely important that farmers are not simply left to deal with the higher costs that come with stricter requirements. This would only worsen the current exploitative situation.

In this context, Sieta van Keimpema, Vice-President of the EMB, points out an aspect in the current proposals by the EU that begs significant improvement: “These important aspects are not given due consideration in the 'Farm to Fork' strategy nor the CAP reform. It is not clear how the situation of producers will be stabilised and protected from further deterioration.” Sieta van Keimpema, therefore, calls on the EU institutions to give these points the consideration they deserve in an amended, improved proposal. “Only then can we say that the EU has developed an effective plan for sustainability”, says the EMB Vice-President. She goes on to underline that the dairy farmers of the EMB, together with the EU, have an optimistic vision of the future, and are ready to share the responsibility of creating the framework conditions for a truly socially and environmentally sustainable future. The EMB has already sent the European Commission its proposals a few weeks ago.

EMB press release of 29 May 2020

France, July 2020

The crisis triggered by the COVID-19 pandemic has also hit the dairy sector. Adrien Lefèvre, Vice-President of FaireFrance and dairy farmer in the Ardennes, answers some of our questions.

How has the current situation affected the sales of FaireFrance fair milk?

When the lockdown was announced, consumers flocked to shops. We were lucky to have an adequate stock of our fair milk products in these same shops. Long-life products like UHT milk and cream were in high demand from customers who, at that point in time, did not know how long this situation would last. Furthermore, FaireFrance products are unique because they are entirely produced in our country, and this was a plus-point for citizens looking to reorient their consumption to local products.

How have FaireFrance sales evolved in this unusual period?

During the lockdown, the sales of FaireFrance products increased by 80% as compared to the same period in 2019. There was high demand for semi-skimmed milk in cartons. There was only a slight variation in demand for organic milk. In order to favour larger productions, we made some strategic choices, most notably by changing our palletisation (half pallets instead of full pallets) and by temporarily discontinuing the production of 50-cl packs.

How are farmers managing to deal with the current exceptional circumstances, in addition to their daily work on the farm?

The farmers who work with the brand and especially our Board members and employees held a number of online crisis management meetings because we are all from different regions and we had to find quick solutions, mainly to solve the difficulties in ensuring that shops were kept supplied. Of course, the crisis triggered by the pandemic has led to some complications, especially due to sections of the transport sector being put on short-time work programmes and delivery times thus becoming twice as long. Furthermore, issues with some forms of palletisation and certain kinds of packaging also led to products being temporarily out of stock.

At this juncture when there is major uncertainty about milk prices all over Europe, could fair milk be a solution?

Yes, in these exceptional times, fair milk is a veritable crisis management instrument. Farmers working with FaireFrance receive a guaranteed price of 45 cents per litre of milk sold. The significant increase in sales has led to real, additional revenue for our members and has also been the perfect response to the expectations of our consumers and citizens.

Do you think that these conscious consumers will continue to buy FaireFrance’s fair milk products?

We have been pioneers in this field since we began to sell our first packs of milk in 2013, and we have only seen our pool of consumers grow. Our concept is ideal to guarantee fair remuneration to every stakeholder in the sector. It could not be more sustainable. In addition, our initiative responds to the changing consumption behaviour of citizens who prefer to buy local products rather than low-cost products that are often imported. The way I see it, this crisis will only speed up these positive changes in consumption.

Thank you for your input, Mr Lefèvre!

Vanessa Langer, EMB

Gembloux, October 2020

At its recent General Assembly, the European Milk Board (EMB) elected former Vice-President Sieta van Keimpema from the Netherlands as its new President. Her appeal to politicians: the Green Deal cannot become a reality without respect for economic and social sustainability.

Kjartan Poulsen from Denmark was chosen by the members for the post of Vice-President. In addition, current Executive Committee members Boris Gondouin from France, Pat McCormack from Ireland and Roberto Cavaliere from Italy saw their mandates renewed. The EMB also welcomed Elmar Hannen from Germany and Guy Francq from Belgium as new members of the Executive Committee.

Outgoing President Erwin Schöpges, who wishes to focus henceforth on the development of Fair Milk in Belgium and some African countries, was given a warm send-off by his fellow dairy farmers. They praised him for his tireless political work and tremendous involvement in the organisation of impressive demonstrations, which have contributed significantly to the development of the EMB. The Assembly also expressed its heartfelt gratitude to Johannes Pfaller from Germany, who stepped down from the Executive Committee after serving for two and a half years, for his long-standing commitment at the EMB to fight for fair trade relations and against the dumping of European surpluses in African markets.

Incoming President Sieta van Keimpema told the EMB members at the Assembly that she believed that representing the interests of European dairy farmers before the EU institutions would continue to remain very important. “I would like to thank you for your vote of confidence”, she said to the members while also looking at the upcoming priorities and challenges: “Advocating for a crisis-proof agricultural policy will be at the very top of the EMB agenda. The European Green Deal and the 'Farm to Fork' strategy (F2F) also need to be considered from a clear producer perspective and the EMB will continue to engage actively with political decision-makers and provide constructive contributions.”

From the intensive exchange on the Green Deal and the F2F strategy at this Assembly of EMB dairy farmers, it was clear that cost-covering prices and a stable income for farmers must become a real priority for EU policy-makers within their environmental strategies. “Economic and social sustainability must be given the same degree of importance as environmental sustainability”, said van Keimpema. “This means that we have to create a framework where the costs of climate and environmental requirements are covered by the price and are not simply passed on to be borne by producers.” Her fellow Executive Committee member Elmar Hannen added: “We have to reach a stage where the price covers what society demands. That is the only way to ensure a future for dairy farmers.” According to Vice-President Kjartan Poulsen, this means that the European Commission’s currently vague goal of improving the position of producers must be fleshed out and made a reality with a concrete strategy. “The EMB expects a clear indication of what steps are going to be taken to achieve this goal, so that it does not simply remain empty words.”

In addition to their political work to ensure that stable producer income is treated on an equal footing, the EMB’s dairy farmers also lead by example when it comes to holistic sustainability. Belgian Executive Committee member Guy Francq explains: “With the Fair Milk project, we have already demonstrated in many European countries that cost-covering prices and environmental and climate protection can go hand in hand. Fair Milk also helps build bridges between producers and consumers.” French Executive Committee member Boris Gondouin also believes that Fair Milk still has growth potential: “For us at the EMB, it is very important to take this project to other countries as well.” He adds: “But if cost-covering prices are to become commonplace in the dairy sector as a whole, we need – as described – the appropriate political framework.”

Photos of EMB General Assembly

EMB press release of 8 October 2020

Not just corrections, but a new orientation: we need a trade policy that ensures fair, cost-covering prices, protects the environment, and upholds human rights, September 2020

In a joint statement by European farmers, 43 farmer organisations in 14 countries – Austria, Belgium, Croatia, Denmark, France, Germany, Italy, Lithuania, Luxembourg, Netherlands, Norway, Portugal, Spain (including Basque Country and Galicia) and Switzerland – as well as the umbrella organisations European Coordination Via Campesina (ECVC), the European Milk Board (EMB) and Biodynamic Federation Demeter International call on their respective governments to reject the EU-Mercosur agreement.

This free trade agreement is being contested by the governments of some member states. Clear criticisms have been voiced by Austria, the Netherlands, France, Ireland and Belgium. Germany, who currently holds the EU Council Presidency, announced that it wishes to make progress on the ratification of the EU-Mercosur agreement, even though Federal Chancellor Angela Merkel has recently expressed concerns about the agreement. The fear is that Germany will accommodate the critical countries with small corrections and push them towards ratification.

European farmers call on their governments to reject the EU-Mercosur agreement. As (editor's note: former) EMB President Erwin Schöpges puts it: “With the EU-Mercosur agreement, imports of products like meat, sugar and soya from the Mercosur countries are set to increase, which, in turn, will encourage them to adopt a strongly export-oriented, even more industrial production model. The Amazon rainforest, which is integral to worldwide climate protection and biodiversity, must remain safe from this system. Human rights violations are also a factor that cannot be ignored in the context of such developments. At the same time, family farms in Europe are faced with major challenges to produce foodstuffs that uphold stricter environmental and animal welfare standards, which implies higher production costs. Increased, non-equivalent imports from the Mercosur countries exert an additional price pressure on Europe’s family farms. This trade policy and these unequal production, environmental and social standards that favour the agro-industry are simply speeding up the disappearance of small-scale farms on either side of the Atlantic.”

The farmers call for a trade policy that promotes fair, cost-covering producer prices across the world, environmental protection, biodiversity and animal welfare, human rights, small-scale farming, regional foodstuffs, the preservation and further development of European standards, and fair working conditions.

Please find here the joint declaration by European farmers

European Milk Board, September 2020