European farmers vent fury at price fall

Farmers threw eggs and poured milk on to the streets of Brussels yesterday in protest at a slump in dairy prices and plans to scrap production quotas.

About 1500 people joined the protest outside the European Council building, bringing traffic in the city centre to a halt, police said. European Union agriculture ministers met there to debate emergency aid to the industry.

Dairy farmers might lose €14 billion ($28 billion) this year after a 30 per cent drop in milk prices, the European farm association Copa-Cogeca said.

"Farmers are furious," Padraig Walshe, president of Copa, said in Brussels yesterday. "Never before was any sector of agriculture so badly affected. Farmers are going broke. The European Commission and ministers cannot stand idly by."

European milk prices fell to an average of 24.77c a litre in August, down more than 25 per cent from a year earlier, according to LTO Nederland's International Milk Price Review. The EU is forecast to produce 134.3 million metric tonnes of cows milk this year, or 30 per cent of world output, according to the US Department of Agriculture. Germany is the EU's largest milk producer, followed by France and the United Kingdom.

"There's a very serious crisis in the milk sector and we need to give it the attention it deserves," Swedish Agriculture Minister Eskil Erlandsson said after the meeting of ministers. "We didn't take any decisions today but we identified areas which the future policy needs to concentrate on."

The bloc's ministers would meet again in Luxembourg this month to discuss measures to support the sector, Erlandsson said. Sweden holds the six-month rotating EU presidency in the second half of this year.

"I regret that farm ministers failed to take any further political decisions today," Walshe said after the meeting. "Many farmers are facing bankruptcy."

The European Commission, the EU's regulatory arm, said earlier this year it would change rules on state subsidies in the next several weeks to allow the 27 member states to temporarily offer aid of as much as €15,000 to farmers. It also proposed changing the output quota so levies for overproduction are used to pay for industry restructuring.

Dairy prices are improving and a high-level expert group would meet next week to start working on "mid- and long-term prospects for the milk sector", EU Agriculture Commissioner Mariann Fischer Boel said, adding she saw "willingness" to find a solutions to the problems in the dairy industry.

The EU last month said it would set up a working group to look at how to improve profits in the dairy industry, including the possibility of a futures market. NYSE Euronext said in September it was considering futures contracts for skimmed-milk powder, whey and butter.

At the previous meeting of agriculture ministers in September, France, Germany and 14 other governments urged the commission to step up aid for the dairy industry, including paying a higher price for milk in so-called intervention buying.

They also proposed increasing export subsidies for butter, milk powder and cheese, they said. The countries want aid reinstated for the use of milk and milk powder in animal feed.

Twenty EU nations agreed on the need for new regulation of the bloc's market to replace the quota system that is being phased out, French Agriculture Minister Bruno Le Maire told journalists yesterday. The EU in November agreed to lift dairy output quotas by 1 per cent a year before scrapping them in 2015.

- BLOOMBERG