One of the major European dairies, Friesland Campina, has just introduced an important instrument for countering further increases in production in the milk market.
The idea is for a bonus payment to encourage dairy farmers to maintain or to reduce their production.
For a milk supply that is equal to or lower than the milk production in the reference period between 13 December and 27 December inclusive, the dairy farmer will receive a payment for the supplied milk of 2.00 euro per 100 kilos of milk (excluding VAT).
The period of the temporary measure will come into force on Friday 1 January 2016 and will run until Thursday 11 February 2016 inclusive. This measure does not apply to member dairy farmers delivering organic or biodynamic milk, because there is no capacity shortage for this.
Sieta van Keimpema, Vice-President of the European Milk Board (EMB), sees this as a key signal, showing how drastic the dairy crisis situation is.
“So the dairies, too, are making it clear that unchecked growth in volume is problematical, and there must be instruments to counter it.
“Friesland Campina has opted for a voluntary limit on supply, or a voluntary restraint on supply. Because that is a very effective way of reducing volumes. It means positive action can be taken in the market and distortions prevented,” Ms van Keimpema continued.
The EMB’s statement said that growth in supply across the EU has caused huge problems and already driven many dairy farmers to ruin. With prices in some cases at just 20 cents a kilo of milk, survival is simply impossible for many farms.
The statement continued: “This instrument ought to be applied not just at individual dairies, but throughout the EU and thus managed centrally.
“Initiative on the part of individual dairies is not enough. It is up to politicians in particular to establish the proper legal framework for this, stipulating a market volume that enables prices to cover producers’ costs.”
Alluding to what the EMB called the ‘passive attitude’ of EU Commissioner for Agriculture Phil Hogan, Ms van Keimpema is adamant: “The EU politicians must finally act now to stop this development and cannot pursue their ignorant line further.”
Her forceful appeal to the Commissioner: “Put into practice a Market Responsibility Programme on an EU level with voluntary restraint on supply as the key element to enable the milk market to finally recover.”
Source – Dairy Site