Europe's milk crisis: Chair of Agriculture Committee De Castro on the causes

In the last few months farmers across Europe have taken their tractors to the streets to protest at what is being termed the biggest milk crisis for decades. Falling prices are destroying livelihoods across the continent. Members of the European Parliament's Agriculture Committee have already backed plans to shore up the market and extend help to the cheese sector. We spoke to the Chair of that Committee, Italian Socialist Paolo De Castro, about the causes and consequences of the crisis.

Why are milk prices for farmers so low?

PDC: This crisis is caused problems with demand because of the state of the international economy and the financial crisis. As well as this big players like China have significantly decreased imports.

With the same number of cows, the same policy, in the autumn of 2007 we had the completely opposite problem, namely extremely high prices.

What should the EU do apart from buying up milk products?

PDC: Now we have to stimulate consumption and maybe at the end of this year or in spring 2010, we’ll see positive signs from the market. The price of milk powder has already increased by 20%.

There are some actions already taken like the milk in school programme. All the decisions to increase the demand and consumption are important.

To minimize the risk of the price fluctuation, the EU should introduce an insurance system as a safety net for the farmers. It could be paid in part by the EU, by member states and by themselves.

Is imported food a threat?

PDC: We cannot be protectionist. The stronger that European agriculture is, the bigger is its capacity to export agriculture products around the world. However, we have to make sure that the products coming from outside follow the same rules as the European farmers - regarding the environment, animal welfare, climate change and so forth. 

Some countries like New Zealand are considering stimulating demand by using milk for biofuel production. What do you think of that?

PDC: Personally I am not in favour of a switch from food to energy. Europe needs to produce food because the demand of the world is so big. The challenge is not to reduce production, the challenge is to produce more to feed the world.

Lots of countries in Africa are very worried about future production of food because according to the latest UN Food and Agriculture Organisation report, 45 million hectares of their land has been bought by such players as Japan, South Korea and China to plant fuel crops.

Why do low the prices paid to farmers not always translate into cheap milk in the supermarket?

PDC: The problem is that the agricultural producers do not have power over the market. On the other end you have the power of the big distribution system and of supermarkets. We need a new instrument to help the farmers to become more organized - more than cooperatives and producer associations. We also have to increase the control to reduce speculation but this is not the main problem.

Meeting in Strasbourg next week the full European Parliament will debate the latest Commission proposals already backed by the Agriculture Committee.