Cost pressure ‘threatening survival’ of European milk production: EMB

By Katy Askew contact

- Last updated on GMT

European dairy farmers warn of sector collapse / Pic: GettyImages-Ben-Schonewille
European dairy farmers warn of sector collapse / Pic: GettyImages-Ben-Schonewille

Related tags: European dairy farmers, European milk board

The European Milk Board (EMB) has warned that increased costs are ‘threatening the survival’ of dairy farmers and milk production in Europe.

The industry body said that despite a ‘slight’ upward trend in pricing, any increases are failing to offset the ‘extreme rise’ in costs farmers are facing. The price of inputs like fertilisers, feed and energy have all spiked in recent months.

In Germany, EMB said the ‘main dairies’ in North Rhine-Westphalia paid dairy farmers 44 cents per kilogramme of milk in February. This was an increase in the farmgate milk price, the farmers’ association noted, but stressed it was ‘far from enough’ to make up for the average increase faced by dairy farmers of 10 cents, as calculated by the Chamber for Agriculture of North Rhine-Westphalia. This places total production costs at 53 cents/kg milk. And prices continue to rise, EMB stressed. For example, the price for the protein feedstuff rapeseed meal has already surpassed 500 euros per tonne in April.

In Portugal, EMB said year-on-year price increases of 62% for diesel, 77% for maize and 140% for nitrogen fertilisers have been reported for April 2022. In France, energy costs have increased by about 30% and fertiliser costs have increased by over 80% within the course of a year.

The situation is already having an impact on the European dairy herd, EMB revealed. Incoming reports from countries like Italy and the Netherlands state that due to the explosion in feed prices, an increasing number of producers are forced to send their dairy cows to slaughter.

“This incredibly tense situation is currently forcing many farmers out of milk production and is eroding farming structures in the EU down to dangerous levels,”​ warned EMB President Sieta van Keimpema.

‘It will be impossible to recover from this’

The Executive Committee of the EMB said it ‘demands’ an adjustment in the price paid to farmers to compensate for the increasing cost of production.

According to EMB Executive Committee member Elmar Hannen, immediate action must be taken. “Further, massive losses in number of farmers is the worst thing that can happen to us in Europe. It will be impossible to recover from this. This rapid withering down of the sector will undoubtedly lead to difficulties in food production in Europe.”

Hannen goes on to say that an agricultural sector without ‘viable’ small scale farms will be ‘highly industrialised’, meaning it is in ‘no position’ to address the need to transition towards less environmentally damaging production methods.

Act now for stable and sustainable milk production, EMB urges

The EMB is calling on decisionmakers to take a number of steps to improve the economic outlook for European dairy farmers, thereby supporting milk production that is more stable and sustainable in the future.
The EMB’s five point plan calls for:

  • ‘Exploding’ production costs to be covered by prices​ - “The EMB explicitly appeals to purchasers and processors to play their part in dealing with increased costs when it comes to milk,”​ the farmer body said.
  • ‘Social sustainability’ in the CAP and the Green Deal ‘must be immediately anchored and implemented’​ - “Without viable farms, there can be no food sovereignty nor a successful transition toward environmental sustainability. Therefore, the EU must make social sustainability an urgent priority in its strategies and regulations.”
  • The market must contribute to the transformation of the agricultural sector​ - “The objective must be prices that offer full cost coverage – including all sustainability costs. To make this possible, the market must contribute to the sustainability transformation in the agricultural sector. Policymakers need to set up the necessary tools for the same. If we were to continue with business as usual, it will be impossible to put the brakes on the steady decline in number of farmers and this trend will only be further accelerated.”
  • ‘Horizontal’ producer organisations must be established​ - Producer organisations that negotiate contracts and prices with processors on behalf of farmers must be established across dairies and throughout the EU with sufficient negotiating power, the EMB stressed. Boris Gondouin, EMB Executive Committee member from France, argued these producer organisations need a horizontal structure that is not tied to a single dairy. “They will have the necessary market power to negotiate with processors on an equal footing only if they can negotiate with multiple dairies at the same time.”​ He believes that it is absolutely essential for farmers from cooperatives to be represented in these producer organisations. “Many farmers are members of cooperatives, which means that they cover a large portion of the milk volume. Cost-covering prices have to be negotiated for these deliveries as well,"​ Gondouin said.
  • ‘Mirror measures’ must apply to imported agricultural products​ - The EMB also revealed it is in favour of imported agricultural products being subject to mirror measures on health and environmental standards. This would mean that agricultural products that do not comply with EU standards are not placed on the EU market. The objective is to ensure that consumers in the EU are always afforded the same level of health and environmental protection, the organisation explained. “Furthermore, this would also prevent local EU products, which are more expensive to produce due to local standards, from being marginalised and replaced by 'cheap' imports. This would simply lead to displacement of production and thus emissions outside the EU. It would be contrary to the desired global environmental improvements in the agricultural sector.”

Related topics: Market Trends, Dairy

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