Clever Politics Are Necessary to Improve the Dairy Farmers Situation

BERLIN, GERMANY — (Marketwired) — 06/09/16 — With the abolition of the European Union’s milk quota system in April 2015 the European dairy industry entered the free global market. It was a joint decision and a step that reflected the political will of all parties involved, as well as the conviction that participation in the free global market was the right way to ensure long-term prospects and a good livelihood for this sector of the European agriculture and food industry.

The world dairy market crisis, which emerged almost concurrently with the abolition of the European milk quota system, was caused by complex political and economic factors and impossible to foresee. This crisis is having devastating effects on both the dairy farmers and the processors.

For almost a year now the farm gate prices haven’t been covering the farmers’ costs with ruinous effects for many of them.

As dairies — both cooperative and private — we not only share the farmers’ and suppliers’ concerns, we are also in dialogue with the milk producers and meeting our responsibility to do everything possible to ensure that the price paid for milk adequately reflects the dairy farmers’ hard work and the value of milk as a nutritious raw material.

This objective of stabilising the market and restoring adequate value creation to the German and European dairy industry should be explicitly and exclusively achieved by continuing to follow the chosen strategy. Despite the serious nature of the current crisis, it should not tempt us to initiate any kind of government intervention or to reinstate temporary statutory regulations. We are aware that too much milk is currently available in the global markets. However, there are already clear indications of declining supply volumes at the dairies.

“The current plans of some German “LAnder-ministries” are counter-productive. They create more red tape, but they don’t improve the farm-gate price,” said Eckhard Heuser, Chief Executive of the Association of the German Dairy Industry (MIV) in Berlin.

“What’s more, the politicians shouldnt delude the dairy farmers by making them think that these plans are realistic. The decisive legislative framework can only be revised at EU level. And unilateral initiatives at national level will only result in additional disadvantages,” continued Eckhard Heuser from the MIV.

Milk price models with a higher price A quota and a B quota will not be supported by co-op dairies because co-ops are based on the principle of equality and that means the same basic milk price for all.

The MIV has also severely criticised demands to abolish the “Andienungspflicht”, the obligation to supply all the milk to the contracted dairy. “The farmers’ supply obligation goes hand in hand with the producers’ acceptance obligation,” said Eckhard Heuser. “Both are key elements of a modern, organised dairy industry. Anyone who questions the supply obligation also questions historical structures, well-balanced partnerships and the fundamental principle of reciprocal protection. If the supply obligation is abolished, the acceptance guarantee will be abolished too.”

This would take away dairy farmer’s security because they would have no guarantee of the milk they produce being accepted, processed and sold in difficult market situations.

According to Heuser, “Policies should focus on safeguarding free trade of milk and dairy products within the EU and ensuring that European milk and dairy products have access to markets outside the EU.”

The Association of the German Dairy Industry (MIV) represents approximately 100 member companies, covering almost the entire dairy industry in Germany. With an annual turnover of about 23 billion euros, the German dairy industry is the largest division in the country’s food sector.