The chips are down for milk producers in Europe, who are struggling to hang on as the continent deals with another milk glut.
The European Union dropped its quota on milk production last year. When that happened, dairy producers upped their production.
Now, Europe is swimming in the stuff. Farmers say they’re getting about 10 Euro cents per litre below their cost of production.
Some discount grocery stores — we’d call them names such as Costco, No Frills, Price Chopper — are even selling milk cheaper than certain mineral water brands. These grocery outlets are buying milk for as cheap as 30 Euro cents per litre — 12 Euro cents less than they were receiving three years ago – and selling it for as little as 46 Euro cents a litre.
Even with exchange, that seems like peanuts. Imagine buying a litre of milk in Canada at a Price Chopper for about 60 cents.
I suppose those kinds of bargain basement prices might prompt some people to drink more milk.
But who could afford to produce it?
The European milk crisis (that’s the term they’re using there) will no doubt re-stimulate the debate about support – or the lack of it — for managing the supply of dairy production and goods in our country.
I was wondering how this crisis was going to affect farmers’ attitudes on two dairy farms I visited near Bonn, Germany with a group of journalists last week, as part of the International Federation of Agricultural Journalists’ annual congress.
How do you manage a farm when the main commodity you produce costs you at least 10 cents more per unit than you earn?
At the dairy farms I visited, the answer to that management question – and certainly the motivation behind it — was family.
Economists are likely rolling their eyes. But too bad. At those German farms, there was something to the strength of family that can’t be discounted in the face of an economic crisis.
Like elsewhere in the world, most farms in Germany are family farms. And like most family farms, they have skin in the game. A lot of it. And their commitment to pulling together during tough times is without question.
For example, one, Jorg Rossenbach, has decided that rather than give up, he and his son are going to increase production and try to make money on milk volume. This won’t ease the glut. But it’s the family’s way of not giving up, keeping the 120-year-old business alive in the face of financial disaster. They have supportive bankers…they’ve expanded their herd by 10 cows, and earlier, increased their use of technology by installing two robotic milking systems and using feed supplements (in this case, from global technology company Alltech).
The other farmer, Bernd Flatten is bringing his daughter Cornelia, a 24-year-old former regional dairy princess, into the business. “I have a passion for cows,” she says, “and the farm is getting to be too much for my parents.”
Granted, this too doesn’t ease the milk glut. But it’s his way of managing for the present, and the future. Cornelia’s always wanted to farm, and he’s not dissuading her now that she’d ready, despite the dairy sector’s economic problems.
Better yet, she’s not discouraged by the status quo. Of course, she’s concerned about the state of affairs, like other farmers. But, she notes, dairy products are widely used. And although the situation looks grim right now, she’s expecting it to correct itself and continue providing her and her family with a living.
All this has made me wonder if we do enough for family farming in Canada, where more than 95 per cent of farms are family owned. With every generation, new challenges arise. And like the German farmers I visited, they address them and do their best to rise above them.
It doesn’t always work. A recent University of Guelph study showed Canadian farmers are under huge stress, and they’re asking for help coping. I suspect the European milk crisis is leaving German farmers feeling the same…and I hope that like here, authorities are creating mechanisms to help farmers deal with it. Family farms everywhere – Germany, Canada, Africa, you name it – need to be on solid ground.