How EU powdered milk threatens African production

The secondary effect of the common agricultural policy (CAP) on African agriculture is a source of concern for MEPs. In recent years exports of powdered milk have soared, threatening the African dairy sector. EURACTIV.fr reports.

If Europeans farmers profit from the policy set up by the EU, the collateral damages in developing countries can sometimes be quite significant.

At a joint meeting of the European Parliament’s Committee on Agriculture and Rural Development, MEPS heard a number of experts on the effects of the CAP on developing countries.

It’s a sensitive topic, as MEPs are currently working on the reform of the next CAP for 2020. “We want the CAP to take into account the needs of developing countries,” said Maria Gabriela Zoana, vice-chair of the committee.

According to the results of a study published by Maria Blanco, professor of Agricultural Economics at the Technical University of Madrid, “the current CAP is more compatible with the development goals”.

The end of export subsidies and the consolidation of decoupled payments have made “the CAP more compatible”, said Blanco, but she also pointed out “coupled payments” applied by the Member States which lead to distortions in the internal and external markets.

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This aid, which can be granted to any agricultural sector with “economic difficulties”, represents 10% of total direct payments of the CAP and can create disparities with serious consequences on developing countries.

European milk for export

The thinking behind European aid schemes has in particular been singled out for criticism in the case of the dairy sector. “There is a real dumping of European milk on the African market,” said Adama Diallo, the chair of the national union for mini-dairies and local milk producers in Burkina Faso.

Since the end of milk quotas, but also with the decline of milk consumption in Europe, the sector is looking for new opportunities in Asia and also in Africa.

For the EU, the end of the 2015 quota system has allowed dairy farmers to set their own production levels and this has resulted in greater market volatility and tougher competition, along with surplus production despite the support mechanisms set up by Brussels.

As a result, European milk is now found as milk powder sold at unbeatable prices in Africa, in direct competition with the local output. Since 2009, skim milk powder exports have increased three-fold according to a study published by Oxfam and SOS Faim.

“What is happening in Africa? We export our overabundant stocks as powdered milk and kill off local agriculture” said the Belgian socialist MEP, Marc Tarabella.

“Our real problem is the skimmed powdered milk, then refattened with palm oil, which is a lot cheaper than local milk and therefore kills off local production,” said Diallo. The supply costs for European milk powder are clearly lower than local milk, which requires transport and processing.

Economic Partnership Agreement

From 1996 to 2013, milk imports from West Africa have been increasing from 0.6 to 2.1 million tonnes of milk equivalent. The deterioration of the trade balance could be further accentuated with the implementation of Economic Partnership Agreements, said Diallo.

On the trade chapter, the agreements negotiated between the EU and the various African regions provide the liberalisation of African markets against free access to the European Market.

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Once implemented, the agreement negotiated between the EU and the Economic Community of West African States (ECOWAS), of which Burkina Faso is a member, should bring down the remaining trade barriers still protecting the local milk production.

“Nowadays, European milk imports are only taxed at 5%. If EPAs were to be implemented then it would give way to a 0% tax,” warned Diallo.

For the European Agriculture Commissioner Phil Hogan, fears about the end of trade barriers are unjustified as African governments are free to introduce more protective tariffs on certain products.

“The Burkina government could set a tariff which would allow its milk sector to develop,” said the Irish commissioner. “I understand that some states would not do it for food security reasons, but it is not the responsibility of the EU,” he added.

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