EU milk plans ‘doomed to fail’, says farmers’ group

By Neil Merrett

- Last updated on GMT

Related tags: European union, Eu, Mariann fischer boel

New measures being taken by the EU to prop up its dairy farmers through the re-introduction of subsidies like export refunds have been derided as being ‘doomed to fail’ by one farmers’ lobby group.

The European Milk Board (EMB), which represents farmers across the bloc, said it was critical of the European Commission’s decision this month to reinstate payments on exports and review intervention payments.

The group called instead for a more flexible system of setting production quotas, which it claims will better serve to control the balance of supply and demand, with an indefinite freeze on future changes to the system.

Other dairy groups such as the European Dairy Association (EDA) were not as critical of the proposals, though still unsure of their effectiveness in offsetting longer-term farmer concerns over meeting costs.

Reinstatement

The reinstatement of export refunds came into effect this week after Mariann Fischer Boel, the EU agriculture commissioner, said she hoped to better support under pressure dairy farmers, after a number of protests last year regarding fears over their income.

Fischer Boel said that the reinstatement of the refunds was occurring at a time when the overall world market price for milk was below EU intervention levels and general market prices. She claimed that exporters from the bloc were struggling in the current market as the situation of high prices being paid on the supply chain for milk in 2007 had now been reversed.

According to the EMB, since Autumn last year, prices have plummeted to below subsistence level, leading the group to accuse the Commission of acting against its own principles by turning to subsidies.

EMB president Romuald Schaber claimed that in turning away from its policy of deregulating the milk market under common agricultural policy (CAP), the Commission was potentially endangering farmers further.

WTO concerns

Pointing to the bloc’s commitments under the World Trade organization (WTO), Schaber suggested that the EU may endanger existing external market protection it had been afforded by turning to measures like export refunds.

“The negative consequences for Europe would far outweigh any possible benefit of this measure,”​ he stated. “In addition, some third countries such as Russia are already debating whether they should disproportionately increase import duties for milk products as a reaction to European export refunds.”

‘Doomed’

Schaber suggested that in the ten months since the EU council of ministers increased milk quotas by two per cent, the milk market in Europe was on course to spiral out of control.

“The Commission’s approach to liberalise the EU milk market is doomed to fail right from the start,”​ he claimed.

From its own pessimistic viewpoint of the measures, the EMB said that it favoured quota regulation as a more effective means of controlling supply and demand.

“The European milk producers are prepared to adapt their level of production to market demand,” ​stated the board. “This is the only way to implement a milk policy that is beneficial to both producers and consumers with stable and fair prices.”

However, not all industry bodies were as critical regarding the Commission’s strategy.

The EDA said that with the situation on the European dairy market having become critical, timing would be vital in successfully relieving farmer concerns over profitability and cost.

Dr Joop Kleibeuker, EDA secretary general, said that he therefore appreciated measures by Europe’s politicians to find a solution to industry concerns, but was wary over potential impacts.

“We however remain realistic and believe that the impact on the market will depend fully on the levels of these different measures,”​ he stated. “While we appreciate these efforts, we are not certain if all foreseen measures, especially the export refunds re-activation, are necessarily the right ones to put in place now.”

According to Kleibeuker, the EDA hopes that export refunds will be effectively introduced at a price that sends a clear message to milk buyers.

“This is crucial,”​ he said. “This first signal must clearly reflect the Commission’s intention to set at once the refund at the level needed, giving the market clear directions on prices.”

Related topics: Markets, Fresh Milk

Related news

Show more