Collapsed milk prices, the China crisis and the Russian ban on imports all mean that Europe needs new markets, said European Commissioner for Agriculture Phil Hogan. He wants to form a group of experts that can plot a course out of the mire. He spoke with EurActiv’s partner Tagesspiegel.
Phil Hogan has been the EU’s Commissioner for Agriculture and Rural Development since November 2014.
Hogan was interviewed by Christopher Ziedler.
Mr Hogan, many farmers think that the agricultural sector is currently teetering on the brink. Specifically, dairy farmers have lamented huge price collapses. Compared with production costs of 40 cents per litre, some are only paid 25 or 30 cents. Your resignation has been called for previously, due to alleged inaction.
The Commission’s President, Jean-Claude Juncker, wrote to dairy farmer associations regarding this. But I understand the difficulties that German dairy farmers have faced in regard to decreasing milk prices over the past year. It was inevitable that there would be fluctuations when the European agricultural sector was exposed to market forces, once milk quotas were ended.
Everyone is producing – partly on credit – come hell or high water. Yet the promised demand from China remains elusive.
We are currently feeling the effects of the China crisis, where people are earning less money. Globally, there is currently an oversupply. Worldwide, commodity prices have fallen. Additionally, the Russian import ban alone has cost European agricultural producers €5.2 billion. That is why I secured a solidarity package in September for our farmers, comprising some €500 million in financial aid, for member states to help farmers through direct assistance or low-interest loans. We are also on the lookout for new outlets, for example, (and) new trade agreements.
Dairy farmers say that it is just a drop in the ocean.
More has to be done, I share that view. That is why, this week, I will convene a panel of experts whose remit will be to develop proposals on how farmers can regain their position in the agri-food supply chain.
Is this not an admission that the scrapping of milk quotas caused this?
No, because this is a different issue to stronger market orientation. At the centre of this matter is how the added-value of the food supply chain can be increased. There are certain obstacles to this goal, for example, the market power of certain oligopolies, which can impose low purchase prices on farmers. We will take a closer look at this from a competition perspective.
This will take time. Farmers are worried about staving off bankruptcy.
Unfortunately, even in times of better market prices, 3.7% of farm operations ceased annually on account of retirements and lack of successors to take up the family business. But we have no evidence that there will be even more now.
What message will you be conveying at International Green Week?
I can promise farmers that in the future it will be easier for them to apply for support from the European taxpayer, due to reduced bureaucracy, there will be some legislative proposals coming on the issue in the next week. However, I have to tell dairy and pig farmers that their difficulties will continue for the next six months. After that, I hope for a normalisation of prices and our trade deals – but that will take a lot of work.
More than ever, EU agricultural policy relies on exports, which leads to problems in developing countries.
That is, in my opinion, a false perception of EU policy. For example, our success at the WTO’s world trade talks in getting the USA to put an end to trade-distorting measures like export subsidies was a fantastic achievement for sustainability.
The EU hasn’t paid export subsidies for a number of years now. What about the fact that European taxpayers’ money is used in the production of tomatoes and poultry meat in Africa, destroying the local economy and, thus, contributing to the refugee crisis?
I would cite the example of tomato production in Ghana. The market share of European products, particularly Italy, has been continuously decreasing for a number of years. The Chinese take 70-80% of the market share there.
This article was also published by EurActiv Germany.