One of Europe’s major dairy companies has decided to pay its dairy farmers a bonus if they do not increase or in fact decrease their milk production for a 6 week period. Suppliers to Friesland Campina will be paid an extra €0.02 per kilo of milk if during the period from January 1 to February 11 2016 they supply not more or even less milk.
The reference volume taken is the average daily supply from December 13-27 2015 period. The co-op processes about three-quarters of all the milk produced in the Netherlands and has almost 13,000 Dutch members as well as another 1,000 in Germany and 30 in Belgium. The European Milk Board (EMB), which lobbies on behalf of about 100,000 milk producers across 15 EU member states, welcomed the move as a key signal and repeated its call for a legal framework for voluntary supply restraint.
Unchecked growth in milk production volume is problematic
Sieta van Keimpema, vice-president of the EMB, sees this as a key signal. She said: "So the dairies, too, are making it clear that unchecked growth in volume is problematical, and there must be instruments to counter it. "Friesland Campina has opted for a voluntary limit on supply, or a voluntary restraint on supply. Because that is a very effective way of reducing volumes it means positive action can be taken in the market and distortions prevented. "This instrument ought to be applied not just at individual dairies, but throughout the EU and thus managed centrally. "Initiative on the part of individual dairies is not enough. It is up to politicians in particular to establish the proper legal framework for this, stipulating a market volume that enables prices to cover producers' costs. "In recent months, unchecked growth as a pan-EU strategy has caused huge problems and already driven many dairy farmers to ruin. With prices in some cases at just €0.20 a kilo of milk, survival is simply impossible for many farms.
"The fact that a major dairy group itself is now pulling in the reins by applying a voluntary restraint on supply shows yet again how drastic the situation is." Commenting on the passive attitude of EU Commissioner for Agriculture Phil Hogan, van Keimpema added: "The EU politicians must finally act now to stop this development and cannot pursue their ignorant line further. "Put into practice a Market Responsibility Programme on an EU level with voluntary restraint on supply as the key element to enable the milk market to finally recover."