Intervention price barely covers 60% of dairy production costs, says EU farmers union

The price paid to producers for putting milk into public intervention stores barely covers 60% of production costs according to Chairman of Copa-Cogeca Milk Working Party Mansel Raymond.

In a public hearing on prospects for the dairy sector organised by MEPs, he said the intervention price must be updated to take account of market realities and to avoid a collapse of the market.

Raymond said in the short term, pressure on the market provoked by the loss of Russia the EU’s main export market for dairy products (accounting for 13% in terms of volume and 13.4% in terms of value) and lower purchases by China on the world market must be alleviated.

“The price paid to producers for putting milk into public intervention stores barely covers 60% of production costs, dragging prices down. It must be updated to take account of market realities and to avoid a collapse of the market,” Raymond said.

“We also need support to find new market outlets for our produce, to remove artificial barriers to trade and to boost export promotion and export support. The European Commission must act.”

According to Raymond global demand for dairy products is nevertheless expected to rise in the medium-term, forecast to grow by 2.1% annually up to 2024.

“We need to be in a position to make use of these market opportunities and remain a key player on world markets,” he said.

Raymond told MEPs that futures markets need to be developed to take some volatility out of the markets and to help farmers hedge against risks.

“Support from the EU institutions is crucial here in the start-up phase.”

He said dairy co-operatives need to be encouraged to help farmers better manage risk and get a better price for their produce. Other tools to help protect farmers against risk like insurance should also be looked at,” he said.

According to Raymond the Commission must also act and punish abusive practices in the food chain with retailers using the fear factor to cut prices ‘below cost’ to producers.

“We need to have more openness and transparency in the supply chain which can be achieved via the recently created EU milk market observatory which provides up to date market data,” he said.

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