U.S. milk producers know all too well the pain their counterparts in Europe are suffering now.
Six years after the U.S. dairy industry was ravaged by low milk prices, dairy owners across the European Union (EU) are struggling for their financial lives.
And as they do, things are getting desperate. And ugly. And sometimes violent.
Throughout the region, but especially in Brussels, Belgium, where the EU's governing headquarters are located, the summer of 2015 has been filled with farmer protests over worsening below-cost prices for milk and meat.
As those demonstrations have spread, pleas for relief to stave off financial ruin have escalated into demands, and protests have occasionally become destructive.
Sharp declines in global demand for dairy products plus Russia's embargo on food from Europe are two huge reasons behind the EU's milk price collapse.
Terrible timing is another. The plunge in export demand came just as the EU's decades old milk production quota system ended, which its major dairy nations had already geared up for. As a result, Europe is literally flooded with milk right now.
The effects have been the same as what U.S. producers saw in 2009: plunging prices, cows going to slaughter, soaring debt, net worth being wiped out, thousands of farms facing bankruptcy, thousands of jobs lost, and spreading despair throughout the agriculture sector.
Press accounts of current milk prices received by EU farmers vary widely, but in Great Britain they tend to range from the equivalent of $12.90 to $15.60 per hundredweight. Those same accounts say the break-even price is $18.30 or more. Two years ago prices were about $21.
In Europe, protests have long been a favorite way of attracting public sympathy and pressuring politicians, and 2015 has seen some beauties, including:
- Dumping old tires and manure to shut down highways in France
- Blocking highways and turning away hundreds of trucks carrying milk and meat from Germany and Spain into France
- Using hundreds of tractors to block highways into Brussels
- Using a high-pressure hose to spray the EU parliament building – and police – with hundreds of gallons of milk
- Burning tires and a trailer in front of the parliament building
- In England, dozens of protesters led two show heifers up and down the aisles of a large supermarket until police arrived and asked them to leave
In response to the growing protests, EU ministers last Tuesday announced a $560 million emergency aid package that includes direct payments to farmers and increased promotion of EU dairy products. But they are still refusing to increase the official "intervention" or support price used to remove surplus dairy products from the market. That price is currently about $11.20 per hundredweight.
(c) Hoard's Dairyman Intel 2015
September 14, 2015
