Farmers crying over cheap milk

The global price of milk in February was the lowest it's been since 2003, a small but welcome development for cash-strapped consumers but a bigger problem for dairy farmers who can't cover production costs, let alone turn a profit. In the European Union, the price drop is the result of a dairy surplus on the market, eased, at least symbolically, by 50 liters of milk spilled March 12 in front of the Marriot in Prague, the site of a two-day conference headed by EU Agriculture Commissioner Mariann Fischer-Boel.

Elsewhere on the same day, nearly 8,000 people - according to estimates given by city police and Agricultural Chamber President Jan Veleba - protested low milk prices as well as the EU's unequal distribution of agricultural subsidies. In the Czech Republic, milk cost an average of 16.60 Kč a liter in the eighth week of 2009, down from 18.28 Kč in the same week last year, according to the Czech Statistical Office. But prices can often be much lower for a liter of milk, undercutting the amount it costs to actually produce it, said Karel Körtelt, a representative of the Association of Agricultural Workers from Frýdlant who attended the protest.

"You have a cow here," he said, pointing to two live cows that were en route with protestors from the Agriculture Ministry to Wenceslas Square. "You spend 7 Kč [$0.33] on her [per liter of milk], and you are paid 5.80 Kč, which is really low and doesn't even cover production costs."

The farmers said they would like to see subsidies increased to levels equal to those now received by older member states - ahead of the scheduled 2013 increase for the newer member states. That would come too late for dairy farmers, according to Veleba, who opened the protest with demands for greater subsidies and aid for the dairy sector.

You'll find Austrians [and] Germans here, and they have the same problems despite receiving higher subsidies. But even [in their countries], subsidies have been reduced, and that's why we're here today: so that we can all show our agreement on agricultural politics."
Karel Körtelt, Frýdlant
Association of Agricultural Workers

"Agriculture isn't self-sufficient and needs subsidies; otherwise, there would essentially be no food."
Petr Lacina, Slovakia

"We are not satisfied because the new member states receive different payments, yet the competition is the same in [all of] Europe. Newer EU members cannot compete with the old members and will be forced to live in poorer conditions."
Jonas Talmantas,
chairman of the Lithuanian Farmers Union

"That would be an end to the industry. There won't be a cow left here."
Miloslava Šťastná, Prachovice, in response to what would happen if dairy farmers had to wait until 2013 for the increase in subsidies

"Our ministers negotiated nothing, and now they don't want to admit it. I fear for the future of agriculture. I might lose my job."
Martin Kohout, Poděbrady

"We also demand steps for saving dairy cattle. This is not the end to our efforts, just the beginning," he said.

One of the concerns is that the EU's dairy quota system, meant to require certain production levels from member states to meet demand, has in fact created the surplus that has driven prices down. But, at the close of the conference, Fischer-Boel said while the quota system is undeniably outdated, it can't be blamed for low prices since many countries have simply not met the quota. The EU Agriculture Commission proposed in February of last year that member states voluntarily raise their quotas 2 percent to meet the growing demand at the time.

"Production of milk in practically all member states is below quota," she said. "This is a natural and very wise reaction from farmers: When prices are low, you lower production. So I will kill any rumor that says the reason for the price situation on the dairy market is the increase of quotas we agreed upon."

She added that milk has become one of the "new challenges," but one that must be taken on by finance ministers and heads of state.

The levels of subsidy distribution would also remain as planned until the changes in 2013, Fischer-Boel said. Currently, the EU and money from the state budget provide Czech farmers with only about 60 percent of the payments given to farmers in older member states, such as Germany and Austria. The Czech government will kick in additional funds this year to bring the amount of direct payments up to 90 percent of those in the older states, promised by Prime Minister Mirek Topolánek and Agriculture Minister Petr Gandalovič last October.

Claire Compton can be reached at
ccompton@praguepost.com