The Extraordinary Conference of the German Federal State Ministers of Agriculture was held in Brussels on 15 July because of the continuing crisis in the dairy sector. It was attended by the Ministers of Agriculture of every federal state, Federal Minister of Agriculture Christian Schmidt, and EU Commissioner Phil Hogan. 

The French Minister of Agriculture Stéphane Le Foll, who had also been invited, cancelled at short notice. The German dairy farmers' association BDM was represented at the important event by Romuald Schaber together with a delegation. Many of the federal state ministers spoke with the BDM representatives  before the conference.

When the ministers’ discussions were over, it turned out that the conference had ended without a resolution. It failed because of the Rhineland-Palatinate Minister of Economy, Transport, Agriculture and Viticulture, Mr Volker Wissing. He had vetoed the resolution for a system of voluntary production cuts, arguing that he did not want a return to the milk quota, and so they were unable to reach the required unanimity. Wissing had voted against the measure, which had the backing in particular of the six green federal state Ministers of Agriculture, the SPD Minister of Agriculture from Mecklenburg Vorpommern, Mr Till Backhaus, and the CSU Minister of Agriculture from Bavaria, Helmut Brunner.

Mr Till Backhaus was visibly shaken. Backhaus knows the dairy farmers’ situation: “It ceased being about financial bottlenecks a long time ago, it’s about professional survival and personal tragedies”.

And Romuald Schaber, President of the BDM, reacted to the veto with shock and anger. “Given the precarious situation on the dairy farms it is a catastrophe that one single politician, new in office, can thwart the hard preparatory work of his fellow ministers and prevent any effective improvement to the dairy farmers’ situation”.

Concrete solutions for the current market crisis are extremely urgent to prevent even greater damage for the dairy farmers. The world market is swamped; the farm-gate milk price is rock-bottom. The forecast is that losses in agriculture will total about 5 billion euros by the end of the year. And no slight recovery in the market should belie the fact that this crisis is still far from over. Now is not the time to give up campaigning and fighting. The future of farms is at stake! The dairy farmers’ considerable losses in added value also mean huge losses for rural areas.

We need a sensible, efficient crisis management instrument to be able to overcome future crises and enable swifter, more effective action.

Nadine A. Gund, BDM

Except for the lack of paranormal assailants like zombies or ghosts, the current situation of milk producers all over Europe could have been taken from a horror movie: disastrous price reporting month on month; the gap between production costs and farm-gate price continues to widen and families on dairy farms live in fear of this very real threat to their existence.

As the figures from April for milk production in Germany show, an average price of 25.78 cents does not even cover two-thirds of production costs which are over 44.60 cents per kilogramme of milk.

These figures are complied every quarter by the Büro für Agrarsoziologie (BAL) and are then published jointly by the MEG Milch Board and the European Milk Board (EMB).

Cost analyses for other European countries show that this is neither a temporary problem nor a situation limited to Germany. For example, costs figures for Denmark and the Netherlands at the beginning of the year clearly showed how even countries with large farm structures are facing a constant deficit in milk production costs. With average costs of 41.70 cents in 2015, Denmark suffered losses of over 10 cents, while the deficit for Dutch producers with costs of 44.50 cents was almost 14 cents per kilogramme of milk. In fact, prices in the Netherlands in recent years have never been high enough to fully cover costs.

"This constant shortfall in price coverage means that farmers must subsidise their production out of their own pockets. To make this possible, they do not pay themselves for the work they put in and take on loans to salvage their milk production and farms for the time being," says Romuald Schaber, President of the EMB, describing the immense pressure faced by dairy farmers. When even this fails, many farms abandon milk production. Schaber says that this raises a very urgent question: "Can we really treat those producing our food so unfairly and allow production in many regions of Europe to simply disappear?"

While it is obvious that the answer to this question is 'No', the next question about options to address these unfair conditions is also self-evident. "To bring prices to a fair level, the volume of milk on the market must be reduced," outlines Schaber as the solution for the dairy sector. "Producers willing to reduce their production volume should receive financial compensation. After all, they would be contributing to stabilising the market, which would benefit all producers in the form of higher prices."

There are many voices calling for these voluntary production cuts at EU level in order to pave the way for the dairy sector out of this horror story - they include ministers of many EU Member States, MEPs and members of the Committee of the Regions. "It is absolutely essential that the European Commission also joins this camp," says Schaber.

Background:

The European Milk Board (EMB) and the MEG Milch Board jointly commissioned the Büro für Agrarsoziologie & Landwirtschaft (BAL) to carry out a cost analysis to calculate milk production costs across Germany. This study is based on data from the European Commission's Farm Accountancy Data Network (FADN), which is further complemented by price indices for agricultural inputs like feed, manure, seeds and energy from the Federal Office for Statistics. It also factors in wages for labour done by farm managers and family members.

To build on this study, the MEG Milch Board developed the Milk Marker Index (MMI) that documents the actual evolution of production costs (with basis year 2010 = 100). For April 2016, the MMI was at 107 points. The MMI is published every quarter along with a price-cost ratio, which shows the relationship between officially recorded raw milk prices paid to producers and milk production costs.

EMB Press release of 15^th July 2016

"You aren't a dairy farmer, you are a milk powder salesman," says the young owner of a dairy in Bobo-Dioulasso in Burkina Faso confidently, as he greets one of the German participants with a firm handshake. This remark really captures the essence of our trip to Burkina Faso.

We are here to see how European milk powder and the European export strategy are affecting Burkina Faso. 'We' stands for a delegation from the European Milk Board, an umbrella organisation for European milk producers, as well as representatives from German non-governmental organisations.

Even in Burkina Faso, a country with 10 million cows and around 17 million inhabitants, milk production, production conditions and producer prices are controversial issues. Milk production is key to the survival of traditional Peulh cattle herders. At the same time, there is an increasing amount of milk powder exerting pressure on the world market as also here in Burkina Faso since the end of milk quotas in Europe. Every year, Burkina Faso imports milk powder worth some 130 billion CFA francs, which is equivalent to 198 million euros. Furthermore, imports of enriched milk powder have increased in the last five years by over five thousand tonnes in Burkina Faso alone.

In Ouagadougou, we meet Korotoumou Gariko. This energetic woman is the pioneer of micro-dairies in Burkina Faso. While she has been producing and processing milk since 1987, she founded the "Milk Round Table" in 2001 together with other women producers, so that they could increase their sales. Milk production here is completely in the hands of the women; they produce 95 percent of Burkinabe milk. "As milk production started to become lucrative, all of a sudden men were also interested and wanted to become members of our cooperative. But we were able to stop that," she laughs. It is important to the women to remain independent. As they can now provide for their families, their social standing has improved. When asked about milk powder imports, Korotoumou Gariko cannot hide her anger: "Our policy is going in the wrong direction. Milk is now only traded on the international market. In this way, Burkina Faso is putting its food security on the line. Policy should promote the milk sector as a whole, so that all milk producers can increase their production and receive good prices. That becomes impossible if we have to compete with cheap milk powder from Europe." This powder is already sold at half the price of local milk; we found little bags of it all over in markets and kiosks. Milk made from milk powder and vegetable fat costs the equivalent of 34 cents, while local milk costs between 76 cents and 1.10 euros.

Milk producers Christoph Lutze and Johannes Pfaller who came with us to Burkina Faso were asked time and time again why they were on this trip. "We do not want our problems to be exported. Europe has to do something to regulate milk volumes. Those who hamper the development of other countries, hamper their own development as well," says Johannes Pfaller. Back in Germany, he has a farm with 120 cows, 100 hectares of land and producers about a million litres of milk every year. Since the 2009 milk crisis, Johannes Pfaller has been active in the Bundesverband Deutscher Milchviehhalter (BDM). Dairy farmer Christoph Luzte from the north of Germany nods in agreement to his colleague's comments. "It is important for me to get to know Burkina Faso's dairy farmers - I want to see with my own eyes what their lives are like." Many here in Burkina Faso cannot believe that more and more farms back in Germany like Lutze's with 160 cows have to fight to survive.

Kerstin Lanje, Misereor

Excerpt from the blog of Kerstin Lanje (Misereor) - you can find the full text in German here: 

If you would like one of the delegation participants to speak at an event for milk producers, please get in touch. You can contact the EMB office or Mr Johannes Pfaller directly.