Russian import ban means lower prices for already cheap milk in the EU

Global Business

Dairy farmers across Europe gathered in Brussels on Thursday to protest falling milk prices, which have dropped even further following an import ban by Russia. CCTV America’s Jack Barton reported from Brussels.

Russian import ban means lower prices for already cheap milk in the EU

Dairy farmers across Europe gathered in Brussels on Thursday to protest falling milk prices, which have dropped even further following an import ban by Russia. CCTV America's Jack Barton reported from Brussels.

Milk prices have been in free fall, and farmers warned that by New Year prices could drop to the equivalent of 30 European cents a kilo (about $0.37 for 2.2 pounds).

“At this price, 80-90 percent of farmers will go broke in a short time, if it continues,” Kjartan Poulsen, the chairman of Danish Association of Dairy Farmers, said.

A global slump in dairy commodities, too much supply, and a fixed quota system have all been blamed.

European dairy farmers had already been hit hard by falling milk profits over the past few years, but when Russia introduced a ban on EU dairy products in August, prices have plummeted even more.

The ban was in retaliations for sanctions targeting Russia over the crisis in Ukraine. Since then, Europe has been flooded by surplus milk as average dairy product prices fell by almost 30 percent.

Farmers wanted the European Commission to approve a crisis scheme proposed by the European Milk Board that would cut production.

“That means in crisis situation, producers who produce less will receive incentives, and producers who produce more will have to pay a fine,” Romuald Schaber, the president of European Milk Board, said.

If adopted, the scheme was expected to hand back more control to farmers.

“Now we are absolutely, totally deregulating the industry at a marketing level, but at a producer level there is a whole plethora of regulations,” John Comer from Irish Creamery Milk Suppliers Association said.

It’s become a burning issue for the bloc’s milk producers, but so far their demands have met with a cool reception from the EU’s executive branch that already plans to scrap the milk quota system in March next year.