Fair & committed – milk producers honour responsible efforts with the Golden Faironika

The 6th International Fair Milk Conference taking place today is a truly special event: for the first time, dairy farmers from Africa and Europe have come together to celebrate successful projects promoting milk production. By awarding the Golden Faironika, they also expressed special thanks to policy-makers, journalists and colleagues for their exceptional commitment to fairness. 

Here you have the Fair Milk Fairebel in Belgium, making history for 10 years now with fair milk prices for local dairy farmers. There you have Fairefaso, a farmers’ milk brand that has been successfully brought on the market by producers in Burkina Faso, in West Africa. Add to that fellow dairy farmers from Austria, France, Germany, Italy, Luxembourg and Switzerland, as well as Mali, Niger, Senegal and Chad who have successfully fostered a strong spirit of solidarity not only with consumers, but with each other as well. All of this is part of the Fair Milk story, which began in Austria in 2006 and is being collectively continued today in Libramont.

Erwin Schöpges, EMB President and person in charge of the Belgian Fair Milk project – the hosts of this year's international conference, is a convinced supporter of the idea as well as its practical implementation. "If as a dairy farmer you see that your own sector and colleagues are constantly under pressure, that economic survival is practically impossible, then you will want to and must take action together. Ten years ago, we decided to join the EMB's Fair Milk project in Belgium. It was a good decision." This decision is bearing fruit and developing further. "We want to act fairly within Europe and beyond as well, which is why we have now started cooperating with Fairtrade Belgium. This means that in the future, our chocolate milk drinks will be made from Fair Milk as well as fairly-traded cocoa." 

Golden ally

At today's awards ceremony within the context of the Fair Milk Conference, the Golden Faironika – the dairy farmers' award – was presented to citizens and institutions that have made special contributions to fairness and sustainability. The newspaper Politico was one of the recipients of this honour for its diligent research and reporting. Member of European Parliament Maria Noichl was awarded this amiable golden cow for her commitment to creating a crisis-proof dairy market. The trophy was presented to Swiss dairy farmer Werner Locher by his colleagues for his tireless political engagement and his strong support for fair, cost-covering milk prices. Former Federal Minister for Agriculture Willy Borsus, who has worked hard to ensure that Belgian dairy producers receive a cost-covering price including a fair income through their membership of Faircoop, was also honoured. The Golden Faironika was also awarded to dairy farmers Herman Vissers from Belgium and Adama Ibrahim Diallo from Burkina Faso for their outstanding commitment. The Luxlait dairy received the award for being a reliable partner to Faircoop, the Belgian Fair Milk cooperative. Lastly, the Golden Faironika was also presented to Agricall, an organisation that has supported farmers and their families for years.

According to EMB Vice-President Sieta van Keimpema, the Fair Milk project, and the resulting cooperation between dairy farmers across countries and continents, sends a very important positive message. "Not everyone against everyone, but together for something. This is what dairy farmers have put into practice in recent years through Fair Milk as well as through their joint political efforts, and with consumers as well. Striving together for cost-covering prices, for a decent living for hard-working dairy farmers, has made all of us rise to the occasion." Now it is just up to a few decision-makers at EU level to do the same, to step up and to finally implement the Market Responsibility Programme (MRP) to bring stability to the dairy sector. 

EMB press release of 12 October 2019

The European Milk Board had the pleasure to ask some questions to MEP Maria Arena on 17 October about EU-Africa relations and their impact on farmers from both continents.

The Belgian Socialist was re-elected for a second term and shoulders high responsibilities as Chair of the Subcommittee on Human Rights, member of the Committee on Foreign Affairs, and member of the Delegation for relations with the Pan-African Parliament and the Delegation to the ACP-EU Joint Parliamentary Assembly.

Where do you see cooperation between Africa and the EU in five years' time, especially in the agricultural sector?

Africa is a key partner for Europe for a range of geographical, political and economic reasons. But I believe that we need to fundamentally rethink the EU’s relationship with Africa, while maintaining mechanisms to support the continent’s social and economic development. We must rethink our agricultural policy and, above all, stop trying to impose our model of industrial agriculture on the rest of the world, especially Africa. Trade relations with Africa must take into account the fact that agriculture is not only a question of exporting goods. It concerns local people, biodiversity and fragile balances within communities (herders/farmers) as well as the use of resources. Agriculture is dominated by a few multinationals, while it is much more than that. I therefore believe that this sector should be excluded from all trade agreements.

Can both continents prevent a race to the bottom in terms of social protection and the environment?

Yes, but it requires the political will of both parties and today there is none, either in Europe or in Africa. We must build a new model together for the well-being of all and not continue with the current model, which is exhausting farmers from both north and south; in the south, people are starving and in the north they are becoming poorer, while a handful of multinationals reap the benefits.

Increased exports of skimmed milk powder to West Africa are endangering the livelihoods of African farmers. What can the EU do about this?

First, we need to understand the mechanisms in place. Who does what in what proportion and with what product? Second, it is important for countries that are victims of these practices to protect themselves by prohibiting the entry of this type of product into the country. Because they are of little nutritional value, they harm local producers with knock-down prices and they promote the use of palm oil, the main driver of deforestation. For all these reasons we must condemn these practices. I am also campaigning for an international treaty, which is currently being discussed by the UN. The aim is to prosecute companies that act problematically for their violations of human and environmental rights. Today, impunity prevails. I hope that African governments will support this approach in the interest of their populations.

Do you have any advice or a message for European farmers?

Yes, their struggles are identical to those of farmers in the south, including those in Latin America and Asia. Today, the survival of family farming, of smallholdings, against the agribusiness juggernaut is at stake. More fundamentally, agriculture must be put back at the heart of the social and environmental challenges of the twenty-first century to ensure the sustainability of our production and consumption.

Ms. Arena, we would like to thank you for this interview.

Nicolas de la Vega, EMB

The law on the balance of trade relations in the agricultural and food sector and healthy, sustainable and accessible food for all (the "Egalim" law) was passed on 2 October 2018. A year later, it has left a bitter taste in the mouths of producers. Problematic practices further down the supply chain, by supermarkets in particular, have not changed. 

As predicted by the Coordination Rurale farmers’ union, neither the law nor all the fine promises has delivered an uptick in farmers’ incomes. The study by the Commission of Inquiry on the situation and practices of supermarkets chains in their business relations with suppliers has provided us with a clearer picture of the past year. In this report, deputies acknowledge that the law they approved last year is ineffective. However, they fail to understand that as long as we import at low cost (by signing free trade agreements) our prices will remain low, and farmers will always fall under the constraints of the competition authority.

The context of the dairy sector:

The Egalim law raised many expectations amongst dairy producers, who had seen their farm-gate prices fall while distributors’ prices continued to rise. For many years now, manufacturers and distributors have been upping their margins, even when their suppliers are in crisis!

The report of the French farm prices and margins observatory (OFPM) to Parliament, published every year, breaks down the price structure of the main dairy products and provides information on price trends. The example of UHT milk, which is the least processed farm-gate product, and is therefore not strongly affected by cost variations, is telling. The consumer price rose from €0.59 per litre in 2001 to €0.80 per litre in 2018, an increase of 36%. This increase in revenue has, logically, been shared across the supply chain, but in such a way that it is heavily skewed towards certain links in the chain! Thus, between 2001 and 2018, supermarkets increased their gross margin by 100%, manufacturers by 68%, and producers saw prices fall by around 12%! The period from 2014 to 2017 is particularly revealing: the price paid to producers has fallen by 41% while the margin for manufacturers has increased by 32%, and for supermarkets by 45%!

Alexandre Chédeville, OPL – Coordination Rurale

The quarterly cost figures for Germany are available and show that only 77% of production costs were covered in July 2019. Even though production costs fell slightly in July, the farm-gate milk price also fell to below 34 cents.

Production costs amounted to 44.28 ct/kg in July; however, producers only received 33.99 ct/kg for their product. Producers thus lack 10.29 ct/kg to cover their costs. These figures come from the German quarterly cost studies published by the Farm Economics and Rural Studies Office (BAL). The Milk Marker Index is converted to a new base year every five years. The MMI calculations for the 3rd quarter of 2019 published on 15 October 2019 were converted to the base year 2015=100. The calculations were adjusted accordingly.

Evolution of milk production costs in Germany

Here you have the evolution of milk production costs in Germany from 2009 to July 2019.

Price-cost ratio (shortfall)

The price-cost ratio illustrates to which degree milk prices cover production costs. In July 2019, producers only recovered 77% of their production costs from the milk price; the shortfall was thus 23%.

Here you see the cost shortfall since 2009.

Milk Marker Index (MMI)

The Milk Marker Index represents the evolution of milk production costs. In July 2019, the MMI was at 107 i.e. production costs for German dairy farmers had risen by 7% as compared to the base year 2015=100.

Here you see the evolution of the Milk Marker Index over time.

Study on milk production cost in six key milk production countries 

Cost calculations are regularly carried out in Germany but also in five other countries. They as well clearly show that milk producers are not paid cost-covering prices. 

New: The calculations of milk production costs in Belgium, Denmark, France, Germany, Luxembourg and the Netherlands for 2017 are now available. You can find the study here (in English).

A chronic shortfall between production costs and milk prices – What is the solution?

The European Milk Board promotes a legally-anchored crisis instrument to counteract the chronic cost shortfall. The Market Responsibility Programme (MRP) observes and reacts to market signals by aligning production. 

Here you have a short description of the EMB Market Responsibility Programme.

Background: Commissioned by the European Milk Board and Germany's MEG Milch Board, the Farm Economics and Rural Studies Office (BAL) started compiling comprehensive data on milk production costs in Germany in 2012 for the study entitled "What is the cost of producing milk?". The calculation is based on data from the EU Farm Accountancy Data Network (FADN) as well as the Federal Statistical Office (Destatis), and has been updated every quarter since 2014.

Download data sheet here

EMB press release of 15 October 2019

The Budget for 2020 lays out expenditure, revenue, taxation and financial projections for the coming year. It is already apparent that the 2020 Budget is a profound disappointment to the agri-sector in general, and farmers in particular, with no sense of urgency around the multiple threats facing Irish farming.

In a normal year, Irish farmers could deal with an underwhelming Budget and get past it. But where we stand now – mere days from the Brexit cliff and still without any agreement in sight – the lack of urgency and detail on farming will be profoundly shocking to the Irish Creamery Milk Supplier Association (ICMSA) membership and the wider rural economy. For a start, where is the reference to current Brexit-related losses? It would appear the Irish Government has decided to let family farms take the hit on this, which is completely unacceptable. The announced Brexit Aid Fund would specifically only be available in the event of a "No Deal", but this is not sufficient. ICMSA is very concerned that there is not a single specific reference in the 2020 Budget to our valuable dairy exports and the potential impact in the event of a No-Deal Brexit.

Our Association has consistently highlighted the challenge of income volatility on family farms and the need to introduce policies that mitigate the destructive capacity of excessive falls or rises in milk prices. But yet again this has been ignored in the Irish Budget, where continuing inaction on the matter is leaving family farms without any capacity to plan ahead and is undermining their very future. This is the perennial problem – our Governments acknowledge that ruinously sharp price and consequent income swings make it impossible to plan on a year-to-year basis, but then fail to introduce the financial tools that are needed to address this. It is a recurring defect in Ireland where everyone acknowledges an obvious problem but no-one – particularly in Government – will take responsibility for dealing with it. We could learn from New Zealand, a country that has been decisive in addressing this problem.

Climate change and the need to lower carbon emissions are becoming key themes in the national budgets of EU countries.  The Irish Government wants to go further with its recent announcement that it will be appointing a "Just Transition Commissioner". But "Just" for who?  Farmers want to play their part in the reduction of greenhouse gas emissions, but we are very concerned that transparency is lacking and that important decisions will be taken by unelected officials without sufficient consultation. Farmers should not be framed as the main culprits of the climate challenge. We must resist this narrative and insist that farmers are a key part of the solution by sequestering carbon, maintaining soil fertility and producing sustainable high-quality food for our communities.

Pat McCormack, President of the ICMSA and EMB Board Member