European dairy farmers demand policy changes to avoid crises
The European dairy market needs a framework that "prevents crises and enables dairy farmers to earn an adequate income".
In the view of the European Milk Board (EMB), the EU currently has a crucial opportunity.
With the revision of the directive on unfair trading practices (UTP), the further development of the Common Market Organisation (CMO) and the discussion on future crisis instruments, several important policy areas are on the table at the same time.
EMB president Kjartan Poulsen said: "We have known for many years where the weaknesses of the dairy market lie.
"Producers are in an excessively weak market position vis-a-vis dairies and retailers, prices usually remain below production costs, and action on surpluses comes far too late or not at all in times of crisis.
"These are precisely the areas where European policy must act now."
Prices below production costs
A key decision concerns the ongoing revision of the EU directive on unfair trading practices.
The EMB said it must in future also address the "most important unfair practice" - the purchase of agricultural products at prices that do not cover production costs.
"A ban on purchasing below production costs must therefore become part of the revised UTP rules," the EMB said.
"In this context, 100% of production costs must be taken into account.
"The rules must not be undermined by company-size criteria, turnover thresholds or other exemptions.
"At the same time, effective enforcement, deterrent sanctions and protection for producers who report infringements are needed."
Crisis management
The EMB said an equally important step is a "fundamental change" in European crisis management.
"When surpluses build up and prices collapse, policymakers must not wait to act until farms have already suffered massive losses – if they act at all," it said.
"The voluntary volume reduction instrument demonstrated in 2016 that the EU can intervene directly in the volume of milk supplied, with a positive and price-stabilising effect.
"This instrument must be permanently embedded in a functioning early-warning and crisis system."The EMB therefore calls for key elements of its Market Responsibility Programme to be incorporated into European market policy."
CMO
The current further development of the CMO will also determine "whether the market position of producers is genuinely improved", the EMB said.
The EMB said it welcomes the fact that important approaches have now found their way into amendments tabled by members of the European Parliament.
These include elements of the Market Responsibility Programme as well as the approach of using full production costs as the reference threshold for triggering market measures.
"What matters now is that precisely these effective amendments secure a majority in the Committee on Agriculture and subsequently become part of the European Parliament’s negotiating position vis-a-vis the Council," the EMB said.
"Furthermore, contracts between producers and buyers must genuinely lead to a stronger bargaining position.
"Binding contractual terms, meaningful cost and market indicators, and effective revision clauses allowing prices to be adjusted to changes in production costs and market conditions are necessary.
"Exemptions must not be allowed to undermine the effect of these provisions."
Mirror clauses
The EMB is also calling for effective mirror clauses.
"Products entering the European market must be subject to requirements comparable to those applying to products from the EU," it said.
"Corresponding amendments in the current legislative process are therefore of great importance from the EMB’s perspective.
"European standards must not result in European producers being placed at an economic disadvantage and parts of production subsequently being replaced by imports."
