With the farm-gate price for milk 26.70 cents, this means only 65% of production costs were covered.
The study, jointly commissioned by the European Milk Board (EMB) and the Belgian Dairy Farmers’ Association (Milcherzeuger-Interessengemeinschaft - MIG), calculates the current costs of milk production based on EU data and takes into account the work input of the farm manager and family members working on the farm.
The study was based on current data from the European Commission’s Farm Accountancy Data Network (FADN), and on Eurostat’s price indices for agricultural means of production like feed, fertilizers, seed and energy, and uses an income rate that calculates the performance of farm managers and family members.
Farmers losing out
Because farm-gate prices fell during the milk crisis of 2015, there was a 35% shortfall in coverage of production costs. In the past five years, according to the EMB, there has not been a farm-gate price level that would have assured dairy farmers of an adequate income.
Erwin Schöpges, EMB board member from Belgium, said dairy farmers are losing out across the board.
“For me the question is how long we can still carry on, when you see that in the last five years our production costs have not been covered and we are practically only running on reserve,” Schöpges said.
Farmers can’t cover costs
The EMB added subsidies paid to dairy farms in 2016 were only 2.27 cents a kilo. Given the price-cost gap of almost 15 cents, the EMB said subsidies barely help secure the farms’ annual income.
“The results lay the hard facts on the table for all to see, and should make a few sit up,” Christian Wiertz, vice-president of the Belgian Dairy Farmers’ Association MIG said.
“It must be evident from this to our politicians and the sector that despite working around the clock Belgian dairy farmers cannot even cover their costs, let alone generate an income.”
Renewed calls for MRP introduction
The EMB said while milk prices are recovering thanks to the EU-wide volume reduction program, Europe’s dairy farmers are not achieving cost-covering prices.
It said the milk market can only be stabilized by managing supply, and called for the implementation of its Market Responsibility Programme (MRP) to be enshrined by law in the Common Agricultural Policy.