EDA suggests time is right for milk price rethink

By Neil Merrett

- Last updated on GMT

Related tags: European union

‘Significant changes’ are required in the approach of European politicians and dairy industries to milk pricing, says the head of the European Dairy Association (EDA).

Speaking to DairyReporter.com, EDA secretary general Joop Kleibeuker said that ongoing discussion between farmers, manufacturers and politicians needed to establish clear guidelines to ensure a more sustainable dairy supply.

Over the last few months, farmers groups from across Europe have been involved in protests and other industrial action as part of plans to draw attention to their concerns over the price they are receiving for their milk.

Kleibeuker said that while ongoing reforms to the EU’s Common Agricultural Policy (CAP), which are designed to cut government intervention in commodity production, could not be stopped, there may be room for some manoeuvre.

He therefore called for ongoing CAP reform health check discussions between the industry and agriculture ministers to find the best way forward for a softer landing ahead of the schemes 2015 deadline to cut subsidies.

“After the high prices of last year for milk and commodities, we are reaching fairly low price levels in the supply chain,” ​stated Kleibeuker. “We are coming close to intervention levels.

Playing fields

In attempts for a solution to address these cost concerns, Kleibeuker suggested that all stakeholders needed to assess whether to reconsider market management instruments such as Private Storage.

The scheme was initially designed to cover the costs of storage for dairy products like cream and butter to obtain a better price later on in the market, though was disposed of in August 2007 by the Commission.

However, earlier this year, agricultural Commissioner Mariann Fischer Boel said that after consideration, Private Storage aid may be temporarily bought back for farmers when markets were found to be in turmoil.

For some that turmoil already appears to be a reality, with the EDA claiming that there appears to be no clear direction with how milk prices are changing in the current market.

“You see differences in the European market,”​ said Kleibeuker. “Products produced to be sold internationally were selling much better than those for the consumer market months ago, this is the opposite of the current situation.”

He stressed that the Commission needed to decide if increased charges in energy and feed costs would also be linked to any potential changes in market intervention.

Discussing changes

Even with establishment of these playing fields, finding a single European-wide solution for a milk pricing solution that can protect farmers while ensuring industry competitiveness could prove difficult, claimed the EDA.

“A solution depends strongly on the local situation, which is determined by individual national markets,”​ said Kleibeuker.

The dairy chief claimed that industry shakeholders may have to consider discussing prices either at national or even at company level if they are to find any future milk pricing solution.

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