EU milk farmers maintain quota cut-calls

By Neil Merrett

- Last updated on GMT

Related tags: European union

Turmoil has continued to rock the EU dairy sector this week as the European Commission pledged balancing its support for milk producers with ensuring wider commitments to market deregulation.

Despite assurances from the European Agriculture commissioner Mariann Fischer Boel that she would work within current frameworks to reassess support systems like early payments, farmers across the bloc continue to protest in regards to their price concerns.

In a speech delivered in Brussels on Monday, Fischer Boel suggested that the Commission understood farmers’ plights, but said current low milk prices were the result of the economic downturn and not production quota changes. Her claims continue to be disputed by some farmer organisations.

The situation reflects wider global concerns about the role of market regulation measures like export refunds, with the US announcing plans to follow Europe in partially reintroducing some subsidies to farmers.

Quota calls

It is in this market that Farmers’ group the European Milk Board (EMB) is calling for a five per cent cut in milk quotas for the 2009 to 2010 business year.

The organisation claims that this level of quota reduction will serve as an effective, short-term measure to protect farmer welfare.

EMB president Romuald Schaber said that the measures taken by the European Commission to increase milk volumes have served to distort the market in favour of retailers, endangering supply.

"In this way the EU-Council has given them even more power and once more shifted the balance to the detriment of the farmers,“​ he stated.

Global concerns

It is not just European milk farmers who are expressing concern about government strategies towards market deregulation though, with US plans to offer financial support to its own dairy exporters coming under heavy criticism from producers in New Zealand.

The US Dairy Export Incentive Program (DEIP) funding scheme will serve to subsidise US dairy exporters between July 2008 and June 2009.

US agriculture secretary Tom Vilsack said the measures will be vital in supporting US dairy farmers in light of moves by the EU to reintroduce export refunds to its farmers as a temporary measure. This comes despite pledges from both governments to move away from subsidised production altogether.

However, Federated Farmers, a New Zealand-based rural lobby group has accused President Obama’s government of acting alongside Europe as ‘evil twins’ by reverting to subsidised protection of their farmers on the global market.

Fonterra, the country’s leading dairy exporter, was also critical, suggesting the US actions would bring further disruption to the global milk market for marginal domestic benefit.

Kelvin Wickham, managing director of global trade for Fonterra, criticised America’s stance on subsidies, claiming the DEIP could prove extremely damaging to the wider global dairy market for a ‘relatively small’ effect on US milk costs.

“Restarting of export refunds by the US sends a very negative signal to the market and the global community,”​ he said. “This is bad news for the market and bad news for our farmers in New Zealand who compete internationally with no support or subsidies of any type.”

Related topics: Manufacturers, Fresh Milk

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