How the EMB wants to fight a dairy crisis

"It is currently 5 to 12, if it is not already 12 o'clock," said German dairy farmer and EMB director Stefan Mann during the presentation in Berlin. According to the EMB, European dairy farming has been in crisis since 2003, mainly because the milk price remains structurally below cost price.

According to EMB calculations, the average cost price for the Netherlands in the period 2013 to 2017 is €43,52 per 100 kilos of milk. The average basic milk price in the same period was €34,25. That is why the EMB came up with the plan in 2015 to develop a market instrument to ensure that action is taken more quickly if the milk price threatens to fall. As far as the EMB is concerned, the minimum milk price is the average cost price.

How does the MRP work?
The organization has now revived and further refined the Market Responsibility Program (MRP). A market index is formed by constantly monitoring various European cost prices and dairy quotations; this does not include basic milk prices, because according to the EMB they always lag behind developments in the market. The market index is basically 100%. If the index is at or above that, the market is stable and no action needs to be taken. However, when the index falls below 100%, a plan consisting of 3 phases comes into effect.

The first phase is the 'Early Warning' and it comes into effect when the index falls by 7,5%. This is determined by the monitoring agency, which is independently determined. In this first phase, private storage for dairy products will be opened up and programs must be implemented to stimulate consumption among consumers (and, for example, the veal sector). This phase will be maintained until the index returns to 100%.

If the index falls by 15%, EMB states that there should be a crisis. In this second phase, the crisis is also declared by the monitoring agency and European dairy farmers are asked to take steps towards a collective production limitation of at least 5%. This is done according to a system of bonuses and fines and based on a predetermined reference period.

If the measures of the first and second phase do not have a significant effect on the market and milk prices and the index drops by 25%, the restriction will become mandatory for every dairy farmer. For a predetermined period, for example 6 months, the production of each dairy farm must reduce by 2% or 3%.

This plan must of course be paid for and the EMB has 3 sources for this. The first is the EC's existing emergency fund. As a second source, the EMB wants the European Union (EU) to stop the current intervention measure. The latest purchase and sale has hurt the dairy market more than good, mainly due to the unrest that has caused the dairy market stocks involve. Thirdly, in times when the milk price is higher, there should be a small levy on the milk money.

Psychological complaints among farmers
The EMB says it is bringing the plan back into focus because times are changing as the dairy crisis continues. By this, the EMB is referring to a milk price that does not cover costs and the group of dairy farmers who are calling it quits. There are hardly any successors ready in European countries, which results in a devastation. "Not to mention the large group of dairy farmers who have... burn-out or other psychological complaints. Politics cannot and should no longer turn a blind eye to this," Mann adds.

The EMB directors admit that the design of the new Common Agricultural Policy (CAP) is also an important reason to draw attention to their plan again. "We therefore want to present a detailed example within six months," says Vice-President Sieta van Keimpema. "We draw up the index with scientists from Denmark, Germany and the Netherlands, in order to guarantee independence. It is also about being able to agree jointly when we speak of a crisis. If we have this clear, Europe can In any case, intervene earlier and better than she did in recent years."