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.
A look at the news

The European dairy crisis: an assessment

October 19, 2015

Since early 2014 the global dairy industry has been in a situation of overproduction caused by a drop in Chinese imports and Russia’s embargo on European dairy products. New Zealand, the United States and Europe have produced an 11 million tonne milk surplus compared to a global market growth of around 2 million tonnes per year. In Europe, the disappearance of milk quotas in April has further aggravated the situation, exposing farmers to the erratic fluctuations of an already structurally unstable market.

Contrary to that affirmed by Phil Hogan, the European crisis exists. Not only have prices declined in France, but the domino effect has expanded throughout the Union with an average milk price of 300€/t, which, in many countries, does not cover production costs. The current plummet also concerns England, Scotland, Ireland, Belgium, Germany and even Lithuania and Finland. Other declines have also been observed in the Netherlands and Denmark. Hence:
  • In France, the Livestock Institute indicates that the average price per litre will be 31.2 cents over the current year, the fourth quarter standing at 31 cents, or, nearly 10 cents less than the previous year while expenses are yet again on the increase. The Livestock Institute predicts a dramatic drop in revenues in 2015.
  • Germany, the European dairy leader, unfazed until recently, last June negotiated the price of a litre at 29 cents instead of 41 cents for the previous eighteen months. In the former GDR, milk prices even fell to 25 cents.
  • In the Baltic countries, the most affected by the Russian embargo, milk exports to Russia fell by 40% and the price per litre of milk ranges from 16 to 18 cents.
  • In Belgium, the current price paid to producers for a litre of milk is about 25 cents, while the cost of production, excluding labour, is estimated at 33 cents. Mid-2014, the price of a litre of milk was still hovering around 40 cents.
  • In Spain, some farmers sell their milk for 22-23 cents a litre, well below the market price.
  • In the UK, the price of milk has fallen by 25%. In August, the average price of a litre of milk was 23.66 pence (0.33 €) while it costs between 30 and 32 pence to produce.
  • In Ireland, the price of milk paid to producers in May 2015 was in the range of 28-30 cents per litre, while in mid-2014 it was 39 cents.
  • In Denmark, while production costs amounted to around 43.32 cents per kilo of milk produced in 2014, producer prices are around 29 ct/Kg. Result, in July, 86% of Danish producers faced cash flow problems. Though the situation has improved slightly since July, it is still unsustainable.
  • Even in Sweden, there were demonstrations by several hundred milk producers who are also affected by falling prices and were calling to save milk production by setting up financial aid.
Despite falling prices, experts in Brussels say that EU milk collection should increase slightly by 1% in 2015 compared to 2014 and a larger increase (+ 1.7%) is expected in 2016.

The situation on the European dairy market will not improve before 2016. The future of tens of thousands of producers is at stake. If Brussels leaves the sector to the supposed virtues of the market, let us hope that national measures are up to the challenge of this agricultural crisis.

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Paris, 17 June 2019