Governments should pay European dairy farmers to cut back milk production before the price crisis deepens further, a protest group has warned.
The European Milk Board has called on policymakers to force a 2-3% drop in milk supplies, as current measures such as intervention prices and private storage are not working.
It wants the EU to introduce a programme that sounds the alarm in crisis conditions, giving farmers bonus payments if they produce less milk and fine them if they up production.
“We are in the middle of a new milk market crisis. And there is no prospect of the situation improving yet.”
Sieta van Keimpema, European Milk Board
Latest figures for the whole EU show milk production in October 2014 was up 3.4% on the year and the market has been flooded with extra dairy products since Russia banned food imports from the union in August.
At the International Green Week event in Berlin, EMB vice-president for the Netherlands Sieta van Keimpema said the oversupply situation would get even worse when European milk quotas were abolished on 1 April.
“We are in the middle of a new milk market crisis,” she said. “And there is no prospect of the situation improving yet.”
The EMB’s market responsibility programme includes a market index that shows whether or not average European milk prices are covering production costs.
If the index fell 15%, farmers would receive bonuses for pulling back production.
If it fell 25%, all farmers would be told to pull back milk production by 2-3% for a set period of time, until the crisis was over.
EU agriculture commissioner Phil Hogan said the milk market problems were due to both Russia’s ban on food imports and a steady increase in production across Europe.
He said the recently established Milk Market Observatory, which pulls together information from across the EU, should improve transparency.
“Many actors in the sector have been looking forward to the end of the quota regime later this year,” Mr Hogan said.
“But the end of quotas also means the sector must learn to read market signals.”
UK governments take action
Members of the Scottish parliament have launched an urgent enquiry into the milk price crisis and will be seeking the views of ordinary farmers.
The rural affairs committee will have their first evidence session on 28 January.
Committee convenor Rob Gibson MSP said he would be looking for explanations from processors and supermarkets.
“It is crucial that we work to find a way to supply milk at reasonable cost than can sustain the dairy industry in Scotland,” he said. “In the coming weeks we will be taking evidence from those on the frontline: the dairy farmers themselves.”
The UK parliament’s Environment, Food and Rural Affairs committee will release its own report into the crisis on Tuesday.