Europe milk over-supply makes it cheaper than water
Sep 14, 2015 09:38 AM EDT
Milk is overflowing in Europe for a lot of reasons, chief of these is that Russia has stopped the importation of milk while Chinese demand has lessened.
There is so much splashing around the European Union that makes milk always less expensive than bottled water. In U.K., a liter of bottled water costs $1.50 while a liter of milk costs only $1. The same is almost true in France. In German supermarkets like Aldi and Lidl, a liter of milk costs only about 55¢ while a liter of bottled water costs around 72¢.
Russia had been one of the EU's largest markets for dairy products responsible for 32% of cheese exports and 24% of butter exports. China is also affecting the milk industry because of the country's less demand. It had been the biggest milk importer and a large buyer of powdered milk.
The sudden fall is a catastrophe for dairy farmers. Thousands of European Union's milk producers with 50 Lithuanian farmers gathered in Brussels Monday, clogging the streets with their tractors, and threw eggs and hay to the police.
They protest the losses incurred because of the small milk purchase prices along with the Russian food embargo forcing them to demand assistance mechanism.
According to Lithuanian MEP Bronis Rope, the EU member-states should prepare a clear anti-crisis plan the soonest time. This is to create a fair payment mechanism and define crisis criteria to help farmers determine when and what kind of support they can expect.
This year, the price of milk in grocery shops plunged by around 5% and wholesale milk prices dropped at 20% or almost 37¢. This made many farmers sell their produce for less than it costs them to make it.
Farmers will be provided €500 billion ($555 million) in emergency support to help them cope with the declining prices. Europe's dairy farmers are confused by the Moscow-imposed food embargo last year as a revenge for Western sanctions over Ukraine.
"Unless production is reduced, the market will carry on deteriorating at a pace," said Romuald Schaber, president of the European Milk Board, which represents dairy farmers.
"Milk should not be cheaper than water. Milk production is a lengthy process which requires a lot of costs. We must also finally understand that the dairy sector's problems are not just farmers' problems. The dairy production and trade sector employs many people, therefore if farmers decide to leave the sector, the impact will be tremendous," says the representative of Lithuanian Peasants and Greens Union.