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Support for struggling dairy industry - 22/07/2009

Farmer milking a cow © EC

New measures to help farmers through recession as milk prices tumble.

Just days after European dairy farmers staged demonstrations protesting over falling milk prices, the EU has moved to reassure the industry that it is doing all it can to support farmers and stabilise the market.

Farmers took to the streets in Strasbourg on 14 July, and Brussels in June, highlighting the impact of plummeting prices. They are now receiving around €0.24 for a litre of milk, down from €0.30 – €0.40 in 2007. Many producers are receiving less than €0.21 a litre.

Two factors are responsible: a fall in demand due to the global downturn and an increase in production by countries such as New Zealand, Australia and Brazil.

Recognising early on that supply was far exceeding demand, the EU launched support measures. Private storage for surplus butter started two months earlier than usual, in January. At the end of June, 105 800 tonnes were already in storage. And export refunds – allowing the EU to sell products at prices competitive worldwide – were re-instated for all dairy products.

Other initiatives, outlined in a report on the dairy market, have included buying surplus butter and boosting the school milk scheme so that more schools begin providing milk and other dairy products to pupils.

Since the EU’s farm policy was introduced over 40 years ago, quotas have helped prevent overproduction of some foods, such as milk and grain. But under current reforms, backed by European leaders, these quotas are being phased out - for milk, the first “quota-free” year will be 2015. And despite farmers’ calls for a u-turn, the gradual withdrawal will continue.

“We will continue to use all the measures we possess to stabilise the market. But, as clearly stated by the European Council, we will not reverse our policy of gently phasing out quotas,” said agriculture commissioner Mariann Fischer Boel. “Putting this into doubt would only create uncertainty and would do nothing to help the situation anyway.”

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