The EU has limited scope to help struggling dairy farmers over the next two years, but is investigating whether big supermarkets are using their buying power unfairly against them, a European Commission report on the dairy market situation shows.
The Commission “is examining potential anti-competitive practices in the food supply chain, especially the dairy sector,” said the report, released yesterday (22 July).
“If the Commission finds competition is not functioning, it will not hesitate to act using all its powers,” it added.
Need for market transparency
Measures to improve transparency on food prices could also help the markets function better and identify problems.
“A permanent Europe-wide system for monitoring food prices could be set up, with comparable price and quality information at producer, processor and retail levels,” said the report.
It also suggested that farmers could work together to counter the bargaining power of the big processors and retailers.
Sieta van Keimpema, president of the Dutch Dairymen Board, said supermarkets should have been investigated a long time ago.
“If you look at the margins, you can see that a margin for a milk producer is zero while the margin for a supermarket can be around 40-60% for dairy products,” she said.
“The European Union could make rules so that every part of the chain gets an equal part of the profit,” she added.
French milk producers welcomed the decision to keep a closer eye on supermarkets but were not very optimistic on the outcome.
“Everyone deserves to earn a living,” said Florence Loyer, chief economist at French milk producers’ group FNPL. “But we are not naive on the results of such work. It’s always very complicated to obtain the real numbers.”
No extra EU money for 2010, no to reduced milk quotas
As to more EU help for the dairy sector in general, “the possibility to finance new measures in the dairy sector in budget year 2010 […] seems quite limited,” the report added. “In budget year 2011, the margin of manoeuvre is similarly limited.”
The Commission said that although EU funds were limited, EU countries would be allowed to extend state aid to dairy farmers in crisis and that €15,000 per farm would be an appropriate level.
The Commission also refuses to revisit the agreement reached late last year on the abolition of milk quotas by 2015. The EU executive said quotas should not be made the scapegoat for the difficult situation on which the dairy sector market situation finds itself (EURACTIV 20/11/09).
(EURACTIV with Reuters.)