A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
Marc Tarabella
Point of view


2015: The dawn of a severe milk crisis



Marc Tarabella,
S&D MEP




#SOSDairy is the hashtag used to send out continuous tweets ... Because with all due respect to some officials in Brussels, the European dairy sector is on the verge of a serious crisis, as recently pointed out by MEP Marc Tarabella.

This MEP is part of a growing number of Parliamentarians who are aware of the lack of risk management tools of the CAP and threats to European farmers and our food security. Plummeting milk prices and high volatility on agricultural prices are all triggers that, according to Marc Tarabella, will eventually destroy the entire chain (from producer to consumer).

Ultimately, it is the whole balance of European agriculture that is at stake, but the situation would not be as dramatic if some officials were not overly optimistic, refusing to see the reality of the sector.

But far from simply yielding to alarmist predictions, Marc Tarabella reminds us that solutions do exist.

We can only recommend that you read the following article, these warnings should serve as catalysts for the European Commission to act urgently.


momagri Editorial Board


“The nightmare scenario is coming true. Milk quotas will be definitively eliminated this April. This will be followed by a tidal wave of milk spilled onto European markets in which weaker producers will drown, much to the chagrin of European agriculture, distribution chains, employment and consumers. While Commissioner Hogan and national ministers announced that there was no crisis, thousands of producers pay to work and are heading straight towards foreseen bankruptcy. Solutions do exist!” declared Marc Tarabella in charge of Consumer Protection and Agriculture at the European Parliament. “300,000 Europeans work directly in the milk sector, this figure could be severely skimmed in the future”.


The reasons

1 / Milk is flooding the market

Already in 2014, milk production increased from 7.5 million tonnes to 148 million. The end of quotas means limitless production and an explosion of this production in countries whose costs are lower or have better infrastructures.


2 / Milk prices plummet

So that producers do not lose money, a litre of milk is expected to cost 0.37€. Except currently this price is hovering around 0.31€. In other words, citizens are paying for the right to work, and work, day after day, at a loss!

An overabundance of milk could plunge the price to 0.25 then 0.20, i.e. to 1979 prices... This is guaranteed bankruptcy for many workers in the sector.

In addition, consumers do not benefit from these decreases.

E.g.: between 2000 and 2007, producer prices were down 6%, while consumer prices increased by 17%.


3 / Market volatility

In Europe, the price of milk fell by 11% in 2014, more than 20% in Belgium and even 40% in some countries such as Estonia. The Russian embargo has increased market pressure but this is not the only reason. Since 2008 and the first mass speculation on food, the market has become toxic for producers.


Solutions

After such an assessment, one can only question the optimistic statements made by several governments and the European Commissioner for Agriculture.

The most conservative countries and representatives encouraged excessive liberalism and used all their influence for the elimination of quotas without preparing for the post-quota period. Even worse, those who condemned the situation or suggested alternatives were marginalized within power institutions.


1 / Public authorities must play a monitoring role

It is clear that the market does not auto-regulate, contrary to what some in politics and large industrial groups have been trying to convince us of for years! A governance mechanism, as already unsuccessfully recommended by us in 2012, is essential!


2 / Supply management is part of the solution, not the problem

Across the world, the situation for dairy farmers deteriorated dramatically except for Canada. Not only does their supply management system cost the taxpayer nothing, but, in addition, it prevents the release of emergency funds to aid a strategic sector. Paradoxically, in the context of the free trade agreement with Canada (CETA), Europe, rather than learning from what works in Canada, asked them to stop using this type of management so as not to cause unfair competition...


3 / Ratchet system

A simple idea: once the price exceeds a positive threshold, a portion of profits is placed in a common pot and redistributed when the price falls below a negative threshold. This measure is not enough in itself, but can serve as a complementary measure.


4 / The safety net: production insurance

If some unscrupulous people can speculate on milk, why can’t we insure production? Farmers could decide whether or not they want insurance and choose their level of coverage.


5 / Milk origin labelling

There is no European legislation for milk origin labelling. Monday, I questioned the Commissioner on the issue.


In conclusion

Though some governments and policy makers struggle to admit, we are at the dawn of an unprecedented dairy crisis. Ending a system without having established its alternative is an aberration.

The European Commission will present an opinion on 28th February, we will see if workers in the field and progressive leaders will be finally heard.” concludes MEP Marc Tarabella.

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Paris, 10 December 2018