Russia import ban shows milk market controls needed

Russia’s ban on Western food imports could have severe consequences for European dairy farmers, a lobby group has warned.

The European Milk Board has said the drop in dairy demand, combined with higher milk production and the lifting of quotas in 2015, would continue to push farmgate prices down and force more producers to quit or fall into debt.

The EU needs to introduce market management tools to stop problems like this turning into crises, the group said.

EMB president Romuald Schaber said dairy farmers lacked mechanisms to help them react to changes in market demand.

“As the dairy industry has become increasingly geared to liberalisation and exports in recent years and pushed ahead with increasing volumes, such situations will always pose major problems,” he said.

See also: Russia food import ban hurts UK dairy companies

Last week Russian prime minister Dmitry Medvedev announced a year-long ban on imports of fruit, vegetables, meat, fish, milk and dairy from the EU, the USA, Australia, Canada and Norway.

For the EU, dairy is the second most exposed sector to the ban after fruit and vegetables.

In 2013, about 27% of the union’s cheese exports and 19% of its butter shipments went to Russia.

DairyCo expects the direct impact on the UK to be limited, as less than 1% of the UK’s cheese, butter, whole milk powder and skim milk powder exports headed to Russia last year.

But the levy board predicted there would likely be short-term downward pressure on the UK’s wholesale dairy prices through their link with European markets.