A very large volume of milk powder to the tune of 380,000 tons is currently in EU intervention. To get an idea of what even a few thousand tons looks like, EU policy-makers and members of the EMB Executive Board visited the Belgian milk powder storage facility Vincent Logistics in Herstal on 24 January. It is currently stacked with milk powder sacks amounting to 12,600 tons, which are awaiting further use.

What can EU intervention realistically achieve and what can it not?

Romuald Schaber, president of the European Milk Board (EMB) does not wish to demonise the concept of intervention in itself. "Intervention is definitely useful in scooping up seasonal surpluses and redistributing them. There is sense in skimming off milk powder during production peaks and selling it at a later point in time, when market conditions are more favourable and demand rises." However, intervention is not a full-fledged crisis instrument that can keep a chronically unstable market in check, says the President of the European dairy farmers association. The overflowing storage facilities clearly show that intervention is not appropriate as a permanent crisis instrument. This milk powder also stands in the way of long-term market recovery.

The European Milk Board is lobbying for a general reduction in the current intervention volume of 109,000 tons per year as well as a simultaneous increase in intervention price. "Intervention milk powder must be sold at a stable price, i.e. it cannot be sold at dumping prices," underlines Erwin Schöpges, EMB Executive Committee member from Belgium. It would also be conceivable to remove the current stocks in alternative ways without damaging the market.

The EMB is advocating for a crisis instrument that is part of the CAP and can counteract chronic market instabilities. This instrument should monitor the market and react to crisis risks associated with current production conditions by activating measures like voluntary production cuts.

As EU Agriculture Commissioner Hogan also states in his guidelines for the new CAP "The Future of Food and Farming", we need a robust framework for the farming sector to successfully prevent or deal with risks and crises. To this aim, effective and appropriate instruments are a must. Considering the 12,600 tons of milk powder sitting in this storage facility in Wallonia alone, the shortcomings of the current Common Agricultural Policy framework have become more than clear to the dairy farmers and EU policy-makers present.

The wall-to-wall shelves of milk powder sacks present a nightmare scenario even for Bocar Diaw, president of the Senegalese interbranch organisation FENAFILS: "When large quantities of milk powder from the EU – from intervention or directly from processors – are sent to West Africa, our local milk producers have to shoulder the burden." Therefore, representatives from a number of West African countries as well as allied European producers signed a declaration in October 2017 denouncing the massive export of European skimmed milk powder to West Africa. The Senegalese dairy farmer does not mince his words with the attending EU policy-makers: "Overproduction must be regulated within the European Union – Stop relocating your problems to West Africa!"

EMB press release of 24 January 2018

Video: visit of the milk powder warehouse

Photos of the visit of the milk powder storage facility

The limitation of intervention for skimmed milk powder adopted by the Council of Ministers on 29/01/18 is very bad news for dairy farmers and for Europe. It is going to usher in a crisis instead of avoiding one as the Commission* would like to believe.

In fact, intervention, which is the final safety net to prop up prices, will prove to be even more essential in light of surplus milk production in the spring of 2018. Announced at the end of January and to be implemented as of 1 March, this limitation of intervention cannot change anything – not in terms of milk production volumes, nor in the production of powder in coming months. On the contrary, the cost of the same will be transferred from the European budget to processors, who guarantee storage at prices determined by them, and producers will end up paying the difference with a drop in milk price. Let us analyse this proposal point by point.

1. Regulating milk production is indispensable but Hogan wants to have nothing to do with it.

Production has, once again, started to increase in Europe and the world while demand continues to scale down. In the last quarter of 2017, milk deliveries in the EU 28 overshot all projections by over one million tonnes. According to projections by the Commission, this surplus in the EU in the span of one quarter corresponds to the expected annual growth in the world market for the next decade. Thus, they themselves admit that the world market is no longer the best option for the sector. Within this new context, a temporary voluntary or compulsory reduction in deliveries in the EU – one of the key players in global dairy production – to permit better volume and price control becomes indispensable.

But Commissioner Phil Hogan continues to bet on major exports and refuses to include a measure on temporary volume control in the Omnibus Regulation in spite of calls from the European Parliament and the Committee of the Regions in support of the EMB's MRP. Hogan has not learnt anything from the past crisis: In 2015, he simply denied it; in 2016, he favoured large-scale powder storage rather than a reduction in milk deliveries. It is only in July 2016 that he finally proposed aid for voluntary production cuts – the only measure to effectively address the market situation. This measure also proved to be less expensive (€150 million were proposed of which €110 million were used) than the billion euros dished out by the Commission and the many billions by other countries, which did nothing but prolong the crisis.

2. Today, the first step toward a healthier market is clearing the old milk powder stocks which are weighing heavily on the European and world market. A recall of these powder stocks should remain an urgent, exceptional measure to correct the bad choices made in 2015 and 2016, when intervention storage thresholds were increased instead of production being reduced. Considering these stocks will soon reach their expiry date for human consumption, it is necessary to study all options, at least for the oldest 300,000 of the 380,000 tonnes of powder in intervention storage. It is absolutely essential to take these stocks off the traditional market and to support their use as global food aid and as animal feed by making the price more attractive for feed manufacturers.

3. The limitation of intervention for the 2018 season without these two additional measures is not only counter-productive, it is a political mistake. Just because stocks must stop increasing, Hogan has decided to close the door, without bothering about the consequences or even worse, by misstating the facts simply to justify the unjustifiable*. Halting intervention this spring for our "fresh powder" surpluses without addressing the issue of old stocks will lead to a "double" drop in milk prices and Hogan will inflict a "double sentence" on producers, while the responsibility and fault largely lies with him. How and why did our Agriculture Ministers get taken in by this ultra-liberal, deceitful proposal simply by its immediate effects? The Council of Ministers must quickly redeem itself by calling for the clearance of old stocks and by reinstating intervention, taking back the reins and putting volume control back at the centre of discussions. If not, demonstrations and abuses will begin again, making dairy-farming regions even more fragile – playing into the hands of Europhobes in this pre-election year.  

André Pflimlin, Dairy expert at the European Committee of the Regions, pflimlin.andr@orange.fr (Author of European dairy production, valuing all regions to build the future (in French); Ed France Agricole 2010)

* Council press release: "In order to avoid a drop in prices and a consequent worsening of farmers' standards of living, the Commission proposed and the Council decided to forego the automatic buying-in of SMP" i.e. intervention! Public storage has always been a way to relieve the market and maintain prices, but with Hogan it will be the opposite!

NB: This text is based on a more detailed analysis published on 22/01/18: How to avoid a new dairy crisis in 2018? (in French)

Within the framework of its sustainable development strategy, ELSA (the dairy industry group at MIGROS) launched a fair milk project in 2017.

From the beginning, Migros's intention was to create a project that addresses the issue of sustainability, but does not, however, lead to too many changes for most producers. Well-aware that our agricultural model uses more calories in the form of inputs and energy than it produces, one could assume that the orange mountain would labour and bring forth a mouse. But no! In terms of sustainability, it is but a tiny fly that has seen the light of day.

It is true that ethological criteria, pasture, the use of basic, especially local forage, the promotion of biodiversity, the reduction of concentrated feed and antibiotics, are all on the right path toward more sustainability.

But neither dairy cows producing 8 to 10kg of milk per day of life, nor some 2 to 3 additional cents per kilogram of milk will guarantee the economic sustainability of milk production. To this aim, it is absolutely essential that the milk price paid to producers covers all production costs which, according to calculations by the FAT, amount to one franc per kilogram.

If we are talking about milk production, it goes without saying that animal welfare must also be considered within the project. But one is forced to conclude that in our mechanised, automated and globalised commercial system, animal welfare has become primordial, alas to the detriment of the human aspect and human beings!

Against this backdrop, it is necessary once and for all to remind engineers and other scientists (as well as animal protection fanatics!) of the immense (often underestimated and neglected) importance that producer welfare (this includes) has on animal welfare! Considering this reality on the ground, the requirement for cows to be registered in the database on animal movements with a name leaves us perplexed!

In the Sustainable Milk Directives, there is absolutely no mention of energy-intensive inputs like fuel, fertilizers and pesticides, nor is there a word about the compacting of our agricultural land under the pressure of ever-larger machines. All this coupled with purchasing contracts with 12 monthly instalments of equal volume in order to achieve more sustainable milk production.

In short: The sustainability of the project as a whole does not even scratch the surface on the basic aspects of sustainability and the project as presented should be denounced as total consumer fraud. In fact, it is nothing more than an excellent marketing gimmick that passes on some meagre crumbs to producers.

Do remember: Without prices that cover production costs, there can be no sustainability!

Milk Committee Uniterre, Switzerland

On the occasion of the 20-year anniversary of the BDM, the EMB would like to warmly congratulate and thank the association for its exemplary dedication.

Extremely constructive, collegial and motivating are the perfect words to describe our collaboration with the BDM. As an important part of the European Milk Board, the BDM together with its European partner organisations represents a large section of the international farmers’ movement. Whether it is with key concepts and stimuli like the MRP or their strong presence at European demonstrations – the farmers as well as the staff of the BDM contribute significantly to the progress of dairy policy at European level.

We thank you for your dedication and wish you: Congratulations on 20 years of extraordinary commitment!

Silvia Däberitz (EMB Management)

Sieta van Keimpema (EMB vice president, Netherlands):

I got to know the members of BDM Nord together with their enthusiasm and engagement 13 years ago. A year later, I then met BDM Süd and their able captain Romuald Schaber. Since then, meetings with the BDM have always been highlights. You know that you are among friends. The drive of its members is something I always find energising and encouraging. Together, we are fighting the good fight!

Let's keep at it! There is one main difference between a live fish and a dead fish: The live fish swims against the tide to reach its goal; a dead fish lets the current carry it along. Till a fair price for milk producers is not a reality, we cannot swim with the tide.

You have been our fellow campaigners for years and so I say: Thank you and all the best for the next 20 years!

Kjartan Poulsen (EMB Executive Committee, Denmark):

The BDM actively participates in informing the EU about the situation on the dairy market and in painting a picture from the point of view of producers. Without the BDM, it would be difficult to bring European dairy farmers on board to work toward better conditions for the over 100,000 families involved in milk production.

The BDM is an important voice in European milk production and in the EMB's work. With its experience with small as well large producers, it contributes significantly in its collaboration with the EMB.

Erwin Schöpges (EMB Executive Committee, Belgium):

Dear colleagues, it has been a pleasure and an honour to fight together with you for all these years toward "cost-covering prices and just remuneration for our work." Together and with all our energy, we will achieve this goal. Our demonstrations in Brussels will not be forgotten, and they will surely go down in history.

"He who fights, can lose; he who doesn't fight, has already lost."

Roberto Cavaliere (EMB Executive Committee, Italy):

Twenty years ago, independent dairy-farmer movements across Europe began to unite to fight against unjust European policies and to protect themselves from the power of multinational corporations. In Germany is was the BDM, in Italy the APL and many such organisations in other countries that began to represent the true interests of producers.

I would like to thank everyone for their effort! I can summarise everything that we are and have created with a famous quote from Mother Teresa of Calcutta: "We ourselves feel that what we are doing is just a drop in the ocean.  But the ocean would be less because of that missing drop." Perhaps we can do more or do it better, but one thing is sure – the BDM, together with the other European associations, has been fully commitment to dairy farmers!

Lastly, a special thanks to Romuald - a great leader and a strong, upstanding man! 

Congratulations and my best regards and appreciation for everyone from BDM!

Boris Gondouin (EMB Executive Committee, France):

Without our German colleagues, we would only be half as strong. I wish the BDM many more years of success and look forward to more joint actions!