“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 campaign 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 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 already 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

At the beginning of the year, there was still some cautious optimism in the sector. Experts and observers were expecting stable or slightly upward market trends – something that was urgently needed by struggling dairy farmers.

The last dairy sector crisis four years ago together with two difficult years of drought in large parts of Germany and Europe have led to a very tense economic situation on many farms. Production costs are still not covered on most farms. And now the coronavirus pandemic has led to turmoil on all global markets, including the dairy market. Though farm-gate prices are still stable, this is probably just the calm before the storm. Analysts at the Dutch Rabobank, for example, are foreseeing a crisis that will last well into the next year. And according to the European Dairy Association (EDA), “the coronavirus crisis has the potential to become the biggest dairy crisis in decades.” Many dairies already foresee price cuts, for example, Ammerland has announced a milk price between 28 and 30 cents for the next six months.

However, in comparison to past crises, the degree of impact varies greatly from one dairy to another. Some companies that mainly supply to retailers can barely keep up with production and supply. Thankfully, this also applies to small, regional dairies and the organic sector, and notably for many farms involved in direct sales and with their own cheese dairies. On the other hand, companies that mainly supply to large purchasers or the catering sector and those that have focused primarily on exports are suffering. Consequently, the signals being sent by dairies to their suppliers are quite heterogeneous. Nonetheless, the bottom line is that we have to reckon with a long-standing milk surplus.

It looks like we are going to pay dearly for the lack of a crisis management system. Political decision-makers have not learnt their lessons since the last crisis, neither at European nor at national level in Germany. The memory of the ineffective crisis management on that occasion is still fresh in the minds of the overwhelming majority of dairy farmers. Above all, there is broad consensus against large-scale private storage and intervention because the stored surplus milk powder stood in the way of market recovery for many years during the last crisis.

The effectiveness of the volume reduction programme, on the other hand, was evident to most. In spite of the many different modalities – voluntary or compulsory reduction, with or without compensation, different reference periods and percentages of reduction – there is consensus that this time around, farms should be bailed out – not dairies. Therefore, measures must be effective BEFORE milk production, thus targeting farmers. Milk that is not required and cannot be sold at a decent price should not be produced in the first place. 

Well-defined models backed by interest groups like BDM, MEG Milch Board and AbL have been on the table for a long time now. Furthermore, “Land schafft Verbindung” can be very useful as a new, large, active organisation that can highlight how farmers’ associations have ended up waging a solitary battle when it comes to dairy sector issues. Networking across Europe through the European Milk Board is also very useful because in other countries like France, the sector is starting to implement its first reduction programmes, and in Austria, for example, dairies are already offering its members reduction incentives.

The pandemic has clearly demonstrated that many sectors can implement measures surprisingly fast, at a speed that would otherwise have been considered impossible – this should be possible in the dairy sector as well!

Excerpt from an article by Ottmar Ilchmann, regional president of the German small farmers’ association (AbL) for Lower Saxony-Bremen

On the occasion of the International Day of Peasant Struggles on 17 April 2020, farmers had only one message for the Federal Council for Agriculture: “Enough is enough!” The statements by Federal Councillor Parmelin on 1 April about facilitating certain imports – especially butter – to help deal with the current COVID-19 crisis are simply unacceptable.

For decades now, farmers and artisanal processors have been sacrificed at the altar of short-term growth and the expansion of the services sector, but even when the system falters, the government decides to continue its support for the globalised market and industrial players in the agro-food sector. The COVID-19 pandemic has highlighted the weaknesses of this food system that has been driven by capitalist market strategies for many decades. The failings of this model have never been more evident and they endanger the key foundations of society. It is definitely time for a paradigm shift.

Open letter to the Federal Councillor

In our open letter to the Federal Councillor on 14 April, we presented our demands for the dairy sector.

Three decades of excessively low prices have gotten the better of more than half of our country’s dairy farms. Bad volume management and the implementation of an obscure segmentation system have generated the necessary chaos to destroy solidarity among farmers and leave them at the mercy of large retailers. Today, this system is fully exploited by milk purchasers, who have resorted to every possible strategy to acquire this precious raw material at an absolutely indecent price: encouraging overproduction, variable-scale segmentation, zero price stability, non-payment of cheese subsidies (which is illegal). Now – and this comes as no surprise – so many producers have turned away from milk production that there is actually a raw-material shortage and we have to resort to importing butter.

• We call for the milk price to be immediately revalued, for the export of soft cheeses at low prices to be stopped and for part of the milk for cheese-making to be used to make butter, while explicitly maintaining the price of non-silage milk and thus anticipating the drop in cheese sales.

It is up to the Federal Council and the Parliament to learn from the crisis we are currently facing and to finally lay the foundations of food sovereignty by creating a framework that values local production, short circuits, small-scale farming and local artisanal processors. We need to stop treating food production as simply making a product for sale, and need to look at it as the basis of a country’s subsistence, which allows it to survive severe crises and much more. Food sovereignty will drive this radical change.

Berthe Darras, Uniterre