Large parts of Europe have experienced major losses due to the continued heatwave. After a wet spring in countries like Ireland, the United Kingdom and France, the dry weather is now negatively affecting pastures, hay and silage production as well as cereal and straw production. As a consequence of the drought, milk producers are missing key, self-produced feed. One can expect production costs to rise due to bought-in feed and the milk yield to suffer.

Ireland

After a wet spring, Irish producers have had to deal with many weeks of hot weather and major droughts. Due to the poor grass growth and burnt pastures, dairy farms must already forgo certain areas or use silage for feed. In addition to the lower feed quality, the milk yield is also going to shrink due to the looming water shortage. Increased consumption has led to water resources running dry. There is currently a nation-wide ban on watering gardens, filling swimming pools, washing cars, etc.

Germany

The ongoing drought in eastern and northern Germany is getting worse. Fires are already breaking out in fields and forests in the east – in certain regions in the area, there has been no rain worth mentioning since April. In an attempt to address the feed scarcity, some German Federal States have allowed ecological focus areas to be used for feed. In the west, south-west and the Alps, in contrast, major damage was caused by storms well into June. The yield of this year's feed harvest is going to be well below average. The very poor cereal harvest implies a significantly lower amount of cereals for feed and thus a shortage of straw production. The production of grass silage will also shrink due to the drought.

France

In the south of the country, crop farming with regular watering of crops has become the most common agricultural activity, with livestock farming, including dairy farming, gradually disappearing. In the other regions of France, milk from only pasture grazing becomes complicated, as it usually needs to be supplemented with other feed. As we see again this year, the distribution of rainfall over the year in each region, and even in each commune, depends a lot on where storms occur. It therefore becomes more and more difficult to manage fodder for animals. Stocks must be maintained throughout the year to compensate for increasingly heterogeneous harvests. Producing a litre of milk or a kilo of meat becomes increasingly complicated.

Belgium

Belgium is usually associated with constant rain, however currently no precipitation is in sight. Dairy cows are suffering from heat stress, which compromises animal welfare, and eventually reduces milk yield. Milk producers are already obliged to buy in feed or dip into winter reserves. The third grass cutting will not happen, and this will probably be the fate of the fourth cutting as well if there is no rain in August and September. This in itself means smaller winter reserves. Maize yields are satisfactory and will only be lower in dry areas.

Denmark

The heatwave is also causing issues in Denmark. The 'Drought Index' (Tørkeindeks) reached its peak in early July at 10 points. In comparison, the index was at zero in summer last year. The meagre grass growth without watering has only allowed for an average 1.5 cuttings to date. Watering implies more work and greater costs for milk producers. There is very little straw and some farmers are already buying from the neighbouring Netherlands. Loss of 30-50% are expected for the cereal harvest; projections for maize silage nonetheless are still positive. This bottleneck in terms of local feed is an especially pressing challenge for organic dairy farmers.

Italy/South Tyrol

Italy has started the growing season with a wet spring; in South Tyrol a snowy winter has provided good soil moisture. In Vinschgau, South Tyrol, a dry period of several weeks allowed for good hay quality. The driving of cattle to alpine pastures took place a little earlier this year, as plenty of vegetation was available. Dry periods alternate with rainy phases.

Lithuania

May and June were extremely dry in Lithuania. Milk producers were unable to prepare sufficient feed, as due to the draught the second cut did not succeed to grow. This draught has significantly affected the income of Lithuanian milk producers. In addition to low milk prices, farmers also face losses related to decreased milk yields and a reduced fat and protein content of milk, which determine the raw milk price. Bottlenecks for feed are predicted for the winter season.

Spain

In contrast to many other countries, our member association from northern Spain is reporting favourable weather conditions. The early part of the year was good for feed production as compared to the low prices in previous years. Market prices for cereals have also decreased thanks to the good harvest forecasts. We have to wait and see how the price for feed cereals evolves.

Regina Reiterer, EMB

On 11 June, members of the German small farmers' association AbL and the German dairy farmers' association BDM, together with representatives from environmental organisations and politicians from the Greens, expressed clear criticism against EU dairy policy in Aschendorf (Lower Saxony). Why? Because of the milk powder stored there.

"This facility is holding 1,800 tonnes. There are almost 300,000 tonnes in storage in the EU. It was not possible to use this volume of milk back when it was produced and it remains useless even today. All milk product purchasers obviously know that these surpluses are still on the market and can thus suppress the price of newly-produced products," says dairy farmer and AbL President for Lower Saxony Ottmar Ilchmann with reference to the resurgence of the downward trend in milk prices. He continues to explain that in the period of low milk prices during the dairy crisis from 2014 to 2016, surplus milk was converted to powder and taken off the market within the EU intervention scheme. This powder continues to be a burden on the dairy market and keeps milk prices low. "The result of misguided policies can be seen in the form of milk powder stored in warehouses like this former curtain factory," says Ilchmann. He goes on to say that this milk powder that no one needs is either stored in such facilities or "sold at dumping prices in Africa, destroying local markets."

Since the end of milk quotas in 2015, many dairy farmers in Germany and all over Europe have increased their production volume. They believed in the prospect of increased exports on the world market, as their policy-makers, dairies and farmers' associations led them to believe. But no one wanted to buy the milk powder, which was produced by cooperative dairies like Deutsche Milchkontor in northern Germany themselves in their own drying towers, and it was therefore sold to the EU.

"These storage facilities cost taxpayers dearly, and only help dairies get rid of their production that is impossible to sell and that does not correspond to market needs, with warehouse owners cashing in as well," says Ilchmann. Taxpayers are footing the bill for millions in storage costs and the current dumping of milk powder. Furthermore, surplus milk production leads to an avoidable environmental burden due to intensification and an increased nutrient load.

Miriam Staudte, speaker for agriculture policy for the Greens in the Landtag, calls for regulation instruments in times of crisis as well because "we cannot just wait for the next crisis, we must develop instruments to prevent them." She wishes to support the kind of dairy farming society is asking for. "And that means that cows belong in pastures."

At the demonstration, it was also clear that action must be taken as quickly as possible. In the words of Ottmar Ilchmann, "Farmers are going out of business and most importantly, many are giving up. They are losing hope that the dairy market will ever come back on track, whereby it will be possible to live off milk production sustainably and in the long term."

Friedhelm Stodieck, published in Bauernstimme on 13 June 2018

Since his investiture, Emmanuel Macron has launched the États Généraux de l’Alimentation (EGA), a set of conclusions and policies that obliges different interbranch organisations to propose 'sectoral plans' – in other words, projects for the development and transformation of agricultural and agri-food sectors.

These plans should aim for more transparent negotiations while revamping the system whereby production costs serve as the basis to calculate the price of finished products. The plan for the dairy sector seems to mainly focus on upgrading the quality of products rather than covering production costs, though everyone seems to be advocating for the latter. While the discussion on production indicators leaves much to be desired, the effect of the many emerging initiatives inspired by FaireFrance like, for example, that of 'responsible dairy farmers' by the cooperative Sodiaal and their impact on prices paid to cooperative members remains to be determined. The fact that dairy companies (private or cooperatives) aims to cover production costs for a very small percentage of production volumes should not be enough to validate a sectoral plan that would do nothing to address the current situation!

A margin divided unilaterally

A comparison of the French and German dairy industries provides a wealth of conclusions. In 2016, German milk production amounted to 31.3 million tonnes against 24.7 million tonnes in France, and the total turnover of processing was 21.9 billion euros and 30 billion euros respectively. Therefore, turnover for Germany was 0.699 euros/litre against 1.214 euros/litre for France. It is difficult to believe that French dairies operate at a cost that is 42% (515 euros/1000 litres) higher than their German counterparts! Furthermore, if we use the turnover of the French dairy industry in 2010 as a reference, this would amount to a cumulative surplus turnover of 32 billion euros over seven years (i.e. more than the turnover of an entire year like 2017), which gives you +190 euros for every 1000 litres processed over these seven years! However, French producers did not receive better prices than their German colleagues and the German dairy industry is definitely not less efficient than the French. Therefore, it is legitimate to demand an explanation from these processors before addressing distributors!

A need to regroup producers

In order to give more weight to the excessive number of producer organisations (approx. 60 authorised POs) in price and volume negotiations, the POs as well as the cooperatives (representing more than 50% of milk deliveries in France) should imperatively be regrouped effectively and in the fewest possible Associations of Producer Organisations. With this kind of collective organisation and, if necessary, a reduction in production volume, producers would finally be able to pull prices up and get the missing 100 euros to reach the 450 euros demanded by the OPL and all the organisations of the EMB.

Véronique Le Floc’h, President of the French milk producers' organisation OPL of CR