Milk Crisis part 2: Solutions

Article by André Pfimlin translated from French exclusively for ARC2020 by Samuel Feret and Peter Crosskey. Part one outlines the milk crisis and the Commission’s responsibility in same; part two, here,  suggests solutions. #MilkCrisis 

Milk Crisis Part 1 by André Pfimlin

A European milk crisis is in full swing.  Here are some proposals to secure the European dairy sector.

In the short term some simple measures to apply across Europe.

a) Raise the intervention price by 20-30% but link the increase to a reduction in delivered milk volumes for the periods of surplus.

b) Define a crisis indicator that will trigger action by the European milk market observatory (1). This will allow politicians and the Commission to intervene earlier and deal with crises.

c) Guarantee European milk producers a margin, following the example of the Farm Bill in the US. This proposal can be implemented very quickly using the three-monthly gross margin index that the Commission publishes.

d) Define a framework that would enable volumes to be reduced in case of a surplus and falling prices; two proposals should be put again on the table, one from MEP Michel Dantin, the other from the European Milk Board (2). They need to be brought back into the debate.

In theory, a combination of the last three proposals (b,c,d) is worth studying and testing, since this combination involves the use of existing tools; it would be a more flexible, and without a doubt, less costly set of options than raising the intervention price.

In the medium term a radical change of strategy is required
It is not a matter of going back to milk quotas. But we do need to meet the real priority of ensuring that over 85% of the milk produced and valorized on our internal market earns a decent price. This will allow us to preserve a living and attractive countryside for more than 500 million European consumer citizens. For the modest proportion of third country exports (2) we need to better define our product ranges, with more cheeses and less powder. We also need to reinforce our partnership agreements with our southern Mediterranean neighbours.

As far as European institutions are concerned, it is a matter of urgency that we change course. To be sure, it is the duty of the Council of Ministers to make strategic choices. Thus it falls to the democratically elected European Parliament to take a lead and to challenge Commission’ omnipotence (3).

At a national level, it is the setting up of regional producer organisations (POs) that could strengthen the producers’ negotiating position when discussing the producers’ share of profits in the supply chain. It is a matter of talking round a table rather than staging violent demonstrations in front of dairy processing plants or supermarkets, like we have seen during the summer in France.

Finally at farm level, this new, more secure framework should allow a re-orientation towards more autonomous production systems, more grass-based, as a credible alternative to the race for volumes and industrialisation, thanks to a better realisation of added-value in regional milk products and a better remuneration of environmental services, which are also public goods associated with these modes of production.

1. http://ec.europa.eu/agriculture/milk-market-observatory/index_en.htm
2. http://www.europeanmilkboard.org/.
3 . Prospects for EU Agriculture markets and income 2014 -2024, MMO- GD AGRI dec. 2014