Christian Schmidt, Germany’s agriculture minister, said at a crisis summit in Berlin that the aid would include loans and tax relief.
“We all agreed that on the one hand we need structural improvements, but on the other that we need to provide short-term assistance to farmers,” he said. “The federal government will provide the farmers with a package of €100m plus X. I am in talks with the . . . finance minister, and will talk to [Germany’s] states and Europe to determine how large the X is.”
Germany is the EU’s biggest milk producer, with its 73,300 dairy farms turning out about 32m tonnes of milk in 2014, or about a fifth of all milk produced in the EU.
As a result, the country has been hit particularly hard by the collapse in milk prices, which have fallen from more than 41 cents per kilo in 2013 to about 24 cents today, according to Germany’s ministry of food and agriculture.
A study from the European Milk Board found that in January the farm-gate price for German milk was 28.66 cents per kilo of milk, but production costs were 44.94 cents.
Milk prices tend to move in cycles, and touched even deeper lows in 2009. But people in the industry say that the current trough has been caused by the EU’s phasing out of production quotas, which was completed last year.
“In the last three years, Europe has produced 13m tonnes more milk than it can consume, and this excess has to be completely sent abroad, because the demand in Europe is stagnating. That is the problem,” said Romuald Schaber, chairman of the European Milk Board.
Mr Schmidt said that representatives of the industry, including farmers and dairies, had also agreed to begin a dialogue on what else could be done to shore up the dairy industry, including short-term reductions in production.
“Farmers and dairies have to match supply and demand better than they have until now. We have to achieve an up-to-date and flexible way of controlling of supply,” he said.
Joachim Rukwied, president of the German farmers’ association, said that the sum of “€100m plus X” needed to be “significantly increased” but added that the package was a step in the right direction.
“It has to be implemented politically as quickly as possible. The EU commission must also introduce further support measures as quickly as possible,” he said.
However, other observers were more sceptical. Mr Schaber said that overall, the measures announced on Monday would have “little impact”.
“€100m is neither here nor there and could even make matters worse if it encourages farmers to produce more,” he said. “It would have been better to use the money to provide incentives to farmers to produce less.”
Source: Financial Times
