Dairy sector: effective instruments needed to solve milk crisis

The dairy sector in Europe is going through a difficult period of low prices and very tight margins: too many farmers are producing too much milk. For Albert Dess MEP, the EPP Group Spokesman in the Agriculture and Rural Development Committee of the European Parliament, the situation is clear: "The current European intervention price system is not working. We need a new ad-hoc intervention system to make sure that certain quantities of milk can be taken directly off the market if the situation threatens to deteriorate in the dairy market. Thus we would get strong price fluctuations in times of crisis better under control. The European Commission should consider whether unbureaucratic, mandatory measures are possible and useful for Europe to reduce milk production in these difficult times of crisis."

In plenary, the European Commissioner for Agriculture, Phil Hogan, hinted that the Commission is considering alternative measures but he was reluctant to allocate additional money as long as some countries have not used existing relief funds. Czesław Adam Siekierski MEP, Chairman of the Agriculture and Rural Development Committee, is of the opinion that among the major causes behind the current crisis in the milk sector are the imperfect functioning of the milk chain and the lack of balance between supply and demand since production is rising at a higher pace than demand. "The costs of the wrong organisation, lack of effectiveness of the instruments and excessive profits for certain entities are creating the high costs and charges being borne by the farmer", added Siekierski.

Political conditions, like the Russian embargo, the declining demand from China and the increasing abuse on part of some operators in the sector are adding to the agricultural crisis enormously. "But there are also technological developments, enhanced capabilities of communication and transport which mean that the market of milk and milk products and their trade has moved from local and regional to a global level making it necessary to strike the right global balance between supply and demand. Thus, what becomes more important are the rules of trade between the EU and third countries and ensuring proper conditions of competition for EU producers, which are conditional upon, among others, animal welfare, compliance with the quality standards and the scale of production”, continued Siekierski.

Albert Dess concluded: "With effective antitrust and competition law, instruments we need to ensure that the growing dominance of individual retail chains are reduced. We need a fair and balanced relationship between agriculture, processing and retail. We must create an effective regulatory framework to eliminate a negative impact for farmers along the food supply chain."