Farmers reaping fewer rewards

Czech dairy farmers, facing subsidy cuts and historic losses due to overproduction, have protested in the streets several times in past months, but the crisis facing the agricultural industry goes well beyond the dairy sector, said the Agrarian Chamber at a nationwide meeting in České Budějovice this past weekend.

Jan Veleba, president of the Czech Agrarian Chamber, said last week on Czech TV that the farming industry is dealing with significantly reduced profits this year of only 2 billion Kč ($112.5 million), a drop of 7.7 billion Kč from last year's profit of 9.7 billion Kč. Veleba also warned that the industry could face losses in excess of 3 billion Kč in 2010 if the Czech government does not immediately establish a concerted effort with the EU to increase subsidies and establish monitoring programs for the farming industry. The combination of falling food and dairy prices, a general recession and a proposed 2010 national budget that includes a 7 billion Kč cut in farming subsidies prompted Veleba to call a meeting of agricultural professionals and politicians including President Václav Klaus this past weekend.

Jan Záhorka, Veleba's advisor, said lower food prices were "without fail" the biggest culprit behind farmers' staggering losses this year. The price of bread and cereals has dropped 4.8 percent since January, according to the Czech Statistical Office (ČSÚ), allowing consumers at supermarket chains like Albert to buy bread for 4 Kč less than at the start of 2009, according to parent company Ahold spokesman Libor Kytýr.

But the lower cost of a loaf of bread is only half the story, said Miroslav Jirovský, president of the Association of Czech Farmers. According to Jirovský, farmers are certainly suffering from lower food prices, but the drop in food cost only minutely reflects the decline of prices for wholesale agricultural commodities like wheat. In the Czech Republic, the market value of wheat has declined in the past six years, crippling farmers' purchasing power, while the price of bread has remained relatively steady.

"Agricultural commodities declined 29 percent in the first half of 2009 compared with the first half of 2008," he said. "The decline in the price of food is only 3 percent."

Both Jirovský's and Záhorka's organizations are asking for greater state regulations to monitor food prices, as they say unfair pricing is rampant in the Czech Republic. The government must work to ensure that large supermarket chains don't artificially adjust costs and hurt farmers by underselling dairy and produce below manufacturing costs.

"Low prices might result in destruction, and big market chains must offer legitimate deals," Záhorka said.

The Association of Czech Farmers has issued an appeal to the Finance Ministry and the Office for Competition Protection calling for stricter controls on retail chains that may be undercutting farmers prices, but there has been little response as of yet, said Jirovský.

Radek Ležatka, a spokesman for the Finance Ministry, balked at the suggestion that ensuring farmers' welfare is the ministry's responsibility.

"There are two problems. Firstly, there is a great oversupply of milk practically all over the world. Secondly, this is a matter of the Common Agricultural Policy of the European Union, and each member state has only limited powers."

Price manipulation and lower subsidies have taken a toll on farmers this year, but another, perhaps more significant, factor has been overproduction. Czech farmers boosted production over the past year to meet high EU quotas, especially of milk, leading to a surplus that deflated milk prices. Jirovský has suggested a temporary 5 percent decrease in EU milk quotas and a leveling of food costs throughout the EU.

"There is overproduction throughout the EU," he said. "The supplies of overproduction have depreciated the prices paid to farmers. The arrangements so far with regard to milk trade have been unsatisfactory."

-- Klara Jiřičná and Petr Cibulka Jr. contributed to this report.

Stephan Delbos can be reached at
sdelbos@praguepost.com