June 4, 2010
Much official attention and taxpayers money has recently been devoted to the perceived ‘problem’ in the European Union’s dairy farming sector. Incomes are chronically low, it is claimed, and therefore measures must be taken to prop up markets and therefore incomes The real problem is however probably insoluble: the inevitably low incomes of too many producers too small and too inefficient ever to make a socially acceptable livelihood. No amount of intervention buying and export subsidising will solve this problem.
The other part of the story is that the efficient medium to large scale producers are actually making very good livings – with average incomes higher than any other in the agricultural industry.
According to the European Commission’s most recent dairy farm income survey, producers in the most favoured and most efficient dairy farming countries of the EU15 have average incomes at least twice the EU15 average and three times those of the least efficient regions. In Denmark, the Netherlands, Belgium and the UK the average net return per person employed is between €36,000 and €69,000 compared with less than €20,000 for countries in the southern and northern extremities of the continent. W hat is not allowed to be said publicly is that these low performing countries should get out of milk production and import their dairy products from the most efficient producers in the EU and elsewhere. The EU’s dairy ‘problem’ would then evaporate.
Instead, despite the claimed remodelling of the CAP into an internationally acceptable non subsidising policy, the EU authorities continue to attempt to prop up the incomes of the less efficient dairy farmers by market meddling. In 2009 in what it described as a ‘pro-active support policy’: the Commission spent around €600 million on dairy market intervention and export subsidisation. This money would be better spent paying off the least efficient.