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 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, as well voices its opposition against this two-tier system. It also 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, Vice-President of the EMB, calls on the EU Institutions like the Commission, the Council and the 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 are now on the table and there is a strong motivation among policy-makers for such an instrument. It is essential for the proposals like voluntary volume reduction with capping¹ during crises as well as – during severe crises – temporary compulsory reduction² 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 reinstate market balance, 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 per cent 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

"Calves are cheaper than canaries" – German news magazine “Der Spiegel” came up with this pithy yet effective headline to encapsulate a problem that has been apparent to dairy farmers for months now: the price of bull calves for fattening has plummeted, and female calves that are not suitable for breeding, like small heifer calves or freemartins from cattle twins, are now practically worthless.

Livestock traders in Northern Germany do not even take small, light calves anymore; it is up to farmers to figure out what to do with them. This headline clearly struck a nerve with the media as many newspapers then took up this topic and reported about rock-bottom calf prices.

There are many reasons for this. The German Farmers' Association refers to trade and export restrictions in many regions in Southern Germany following an outbreak of blue tongue disease. The feed shortages in many areas in this second year of drought are definitely an important factor as well.

MP Friedrich Ostendorff from the Greens, who is specialised in agricultural policy, sees the dismal prices in the Der Spiegel report as an "unfortunate knock-on effect of industrial farming" and says that excessive "calf production" is the result of intensive dairy farming. However, dairy farming and bull fattening in Germany is still mostly carried out on small-scale farms and these are, in fact, the sectors where industrial farming is the least developed. Furthermore, the current undeniable move toward intensive dairy farming means that while milk volumes have been steadily increasing for many years now, the number of dairy cows (which are more productive) is on the decline, thus also leading to the birth of fewer calves.

So, the problem is not overproduction but, at best, the fact that calves from cows bred for high milk yields are less suitable for fattening. Nonetheless, industrialised farming is something that has affected one important area – specialised calf fattening. This practice, which aims at producing very light-coloured veal by unnaturally extending the suckling period without providing the required roughage feed, is highly questionable in terms of animal welfare. However, and most importantly, there is very high concentration with a few farms, often based in other countries like the Netherlands, for whom many initially independent farms now undertake fattening on a contract basis. Thanks to their market position, this handful of buyers essentially determines the price for small calves because both livestock traders and dairy farmers have a very weak bargaining position in relation to the buyers.

Basically, we are dealing with a dysfunctional market – as is the case in many other areas of the agricultural sector as well. This is also confirmed by the fact that there is hardly any seasonal variation in calf prices, in contrast to previous years, and the number of calves born is hardly reflected in the price. It would definitely make sense for politicians and leading media to investigate evidence of these economic correlations, instead of quickly citing "industrial farming" and overbreeding. It would be even more important to start a discussion on what it says about society when a living being becomes practically worthless, and about how long society wants to produce cheap food stuffs to the detriment of environmental, social and animal welfare standards.

Ottmar Ilchmann, AbL

On 7 January, APROLEP – the Portuguese dairy farmers' association – organised a lunchtime debate in Benavente, bringing together about 70 milk producers from across the country. The speakers included Pedro Pimentel, Managing Director of Centromarca (Portuguese association of branded products’ manufacturers), and David Gouveia, Director of Competition Services at the Planning and Policy Bureau of the Ministry of Agriculture (GPP).

Pedro Pimentel's presentation was entitled "The future of the dairy market". In spite of economic fluctuations, the future of the dairy sector is quite promising on international context. In Portugal, the consumption of UHT milk has seen a decrease while that of cheese has increased, even though it still remains below the EU average. "The nutritional benefits of milk and dairy products cannot be refuted, but we need to emphasize origin and raise awareness through scientific data and targeted communication."

David Gouveia talked about "Milk production in the CAP post 2020", where he presented the strategic plan for the next Common Agricultural Policy. The main objectives therein are "promoting a smart, resilient and diversified agricultural sector to ensure food security" and "supporting environmental protection and climate-change mitigation, and contributing to the EU's environmental and climate targets." 

Even though the new CAP is still taking shape and shall only enter into force in 2022, APROLEP believes that it is important to be prepared for a possible reduction in annual income support for dairy farmers. The association reaffirmed the position it has always defended: producers do not want to depend on compensatory subsidies for constant crises. They want to earn a living from their work by being paid a fair milk price. APROLEP is of the opinion that investment aid should go toward production that is more efficient, more sustainable and better adapted to market needs but, at the same time, the CAP should also compensate farmers for the environmental services they provide, notably for carbon sequestration and other efforts that help mitigate climate change.

This lunchtime debate was the first of its kind and scope organised by APROLEP in the south of the country, and was the first event to celebrate the ten-year anniversary of APROLEP, which was founded with a mission to "defend dairy farmers by joining forces, pooling knowledge, sharing experience, and creating solidarity among producers."

Carlos Neves, APROLEP

In our previous newsletters, Fair Milk projects in Switzerland, France and Luxembourg were presented. In this edition, German dairy farmers give an insight into their Fair Milk project.

For many years now, Die faire Milch has been well-known among consumers in Germany for its sustainable production standards. The brand’s stakeholders – all of them German family farms – pledge, for example, to not use feed from overseas and to avoid all GMOs.

Die faire Milch is also the first food brand in Germany to commit to area-based dairy farming. This is equally beneficial for both our livestock as well as our pastures. Die faire Milch has thus added yet another criterion of sustainable production to its already high quality standards.

“With our rule on livestock density, we can effectively prevent nutrient surpluses and over-fertilisation of agricultural land,” explains Ralf Ehret, consumer and cooperative member. The aim is to strengthen regional circuits. “Furthermore, this decision ensures that the cows remain healthy in the long term,” continues Ehret.

Three different types of milk with different fat content, as well as lactose-free milk are currently available in food retail stores. Our cheeses (a semi-soft cheese with a buttery flavour, Alpine cheese and Emmental) are the latest addition to our range of products. In addition, our brand also sells chocolate milk in small, single-serve packs.

The profits from this fair project go to the farmers participating in it. The entire participant list is also published on our website, thus allowing us to offer the greatest degree of transparency to consumers.

Further information at www.diefairemilch.de

Michael Braun and the EMB office