'Resources are ready when milk price collapses'

The European Commission decided yesterday (Wednesday 22 April) to open the private storage scheme for dairy products such as skimmed milk powder, butter and cheese. The voluntary milk reduction plan is also one step closer. How is this being responded to?

Wil Meulenbroeks, chairman of LTO dairy farming, is 'in principle' positive about opening up the private storage scheme, which LTO has also urged through the European umbrella organization Copa-Cogeca. “The dairy market is very uncertain and it is difficult to estimate how developments will be in the coming months. That is why it is good that the instruments are ready in case intervention is necessary.”

Is the remedy worse than the disease? “You sometimes hear those noises, but the situation becomes dire when the payout prices drop sharply to, for example, under 30 cents. And given dairy prices have plummeted, that's a realistic expectation. The storage scheme for dairy products may offer a solution for this.”

Voluntary milk reduction
Voluntary milk reduction in Europe is also being considered. Under normal circumstances this is not allowed, but the European Commission has tapped into Article 222 of the Code (Common Organization of Agricultural Markets) which allows for derogation from this. "The lock is now off, although nothing else is on paper yet."

Meulenbroeks estimates that there is a lot of support for the plans within the various member states. “After all, a voluntary production limitation is always better than having the milk forced into the manure pit. Fortunately, this is not yet the case in the Netherlands, but dairies in other countries are already standing still. Incidentally, the voluntary milk reduction plan is independent of any processing problems, but this measure is mainly intended to match supply and demand.  

Details determine success
René van Buitenen, spokesperson for the Dutch Dairy Organization (NZO), says he supports the storage plans of the European Commission, given the difficult situation on the dairy market. According to him, the European Dairy Association (EDA), of which NZO is a part, has been insisting on this for a few weeks.

“However, our level of enthusiasm will depend on the details of the settlement, which will not be known until next week.” According to Van Buitenen, it is up to Dutch dairies to assess whether they will make use of the scheme or not. The FrieslandCampina spokesperson stated that he endorses the NZO's position and that the dairy cooperative itself does not take an individual position on the scheme. 

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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