While applauding the news, the EDA says swift action is needed, and the measures are only the first step, as the coronavirus crisis has the potential to become the biggest dairy crisis in decades.
The designation of milk and dairy as an essential sector and the associated EU measures including guidelines on the green lane border crossings and free movement of workers, have already helped substantially in maintaining functioning supply chains across regions and borders.
The EDA said even though the dairy industry is operating – collecting the milk of the around 700,000 dairy farmers in the EU – it is now being done largely at a loss.
The EDA said it is asking the EU Commission to implement the proposals immediately.
The announced €30m scheme for Private Storage Aid for skimmed milk powder, butter and cheeses can only be the first step - a first small step financed by unused funds under the existing DG AGRI budget.
EU agriculture and EU dairy, with its – recognized – essential societal role today and its future role in the recovery phase, especially in rural Europe, cannot be the only sector in the Union where support is limited to residual budget funds and to today’s pre-COVID Multiannual Financial Framework, the EDA continued.
EMB shuns EU measures
And the EMB said dairy farmers are reacting with disbelief to the latest measures announced by the EU Commission.
The EMB said the Commission’s plan is to counter the increasingly spiralling crisis in the dairy sector with aid for private storage without a simultaneous EU-wide co-ordinated reduction in volumes.
Just like the second current proposal from the Commission to allow milk producer organizations and interbranch associations to plan production, the instrument of storage had already been unable to halt crises in the past, the EMB argued.
Erwin Schöpges, EMB president, said the crisis can only be managed if the excess supply of raw milk is reduced by an EU-wide co-ordinated voluntary supply reduction.
That is why the private storage aid now announced should be unconditionally combined with a voluntary volume reduction scheme (including a cap on volumes), he said. In addition, storage volumes should not be allowed to exceed 45,000 tonnes of milk powder and 60,000 tonnes of butter.
The EMB said aid for private storage is not an adequate response to the crisis, because it cannot prevent any surpluses. As it does not act on the producer level, where there is overproduction of milk. Already processed excesses are being stored – products like milk powder, cheese and butter.
The EMB added that, even when stored, surplus dairy products impact on the market, because they still are part of the excess supply. Hence, the volumes put into storage also exert downward pressure on the market price. So, first of all, crises are not resolved and, second, even prolonged, as when the stock items are sold again afterwards, they prevent a fair price recovery on the market.
Sieta van Keimpema, EMB vice-president, said, “It is inconceivable for us milk producers that they are resorting to these measures yet again. There are facts from the previous crises that they do not have the desired effect. It is evident that the voluntary volume reduction scheme co-ordinated by the Commission on an EU level is already a tried and tested instrument. That is why it also has to be applied now in addition to private storage with a stricter cap.”
But it has to be activated quickly, van Keimpema said, otherwise the crisis would already be too far advanced and a compulsory reduction in volumes necessary for every producer.
“We have no time to lose, instead we have to be right on course for stability now. Brexit will be upon us in a few months, and that will also run the sector ragged. If the current situation weakens us too much, it will be a disaster.”
With a voluntary volume reduction scheme at EU level, the pressure on the milk prices could be reduced effectively.
Schöpges said, “The producers would have to be given enough compensation per liter of milk not produced to be able to face the economic consequences.”
He added that without this compensation, farmers would have to bear the bulk of the impact of the corona crisis in the sector on their own, which they are simply incapable of doing in the crisis-ridden milk market.
“The political decision-makers now bear responsibility for the coming negative development of milk prices. What are the next steps they have planned? Because the current measures won’t help,” he said.