CAP in hand?
The European Dairy Association’s Dairy Policy Conference in Brussels showed that EU policy after 2015 needs critical thinking. Suzanne Christiansen reports
A trip to Brussels on a very cold day seems necessary in order to see what exactly what the European dairy industry thinks of two topics that keep cropping up: the Common Agricultural Policy (CAP) through 2020 and the need for a more holistic approach in European health policy-making. The possible idea of crisis supply management, where there is a floor to milk prices for producers, was also examined in depth.
Mark Voorbergen from Claassen, Moolenbeek & Partners looked at global dairy markets beyond 2015 and the impact they will have on European Union value chains. Voorbergen predicts that there will continue to be European dairy investment in milk supply, but for the purpose of selling it outside of Europe.
Global consumption is continuing to grow, particularly in emerging markets in urban areas, he notes. Most net dairy importing countries don’t have their own tradition of milk production, and this will provide opportunities. However, there will be a challenge to keep the pace, he says. “Between 2011 and 2013, the milk supply is slightly ahead of demand growth, but between 2014 and 2017, milk supply will start lagging behind, despite post-2015 EU events and continuous growth in New Zealand and the US,” Voorbergen points out. “As New Zealand moves towards more intensive dairy farming, its costs become more aligned with the rest of the world prices, but it will be a challenge as Fonterra targets almost all of its production towards Asia right now.”
European Union dairy farmers will have to learn to deal with volatility, and resist the temptation to use supply management to control dairy costs. “The post-2015 era should be seen as an opportunity rather than a threat for European dairy chains,” he concludes.
Dr Jan Maartin Vrij, the director for international dairy affairs for the Dutch Dairy Association, and chair of the EDA trade and economics committee, spoke about the future for dairy processors after the EU quota ends. “Communication is the key word in preparing for the future without milk quotas,” he notes. “For the last 25 years, there was a volume set, and now processors have to plan without a mandated volume.” Thus, these entities need to communicate with their producers on supply and with their end users on demand. Half of the respondents to a recent EDA survey have said they now have contracts in place with agreements on volume.
Professor Michael Keane, a consultant and formerly with the University College in Cork, Ireland, examined supply management possibilities after 2015 and concludes that these would be counter-productive. This type of policy seems to work well only in closed economies, he notes. ‘The problem is that our economic policy has changed from a largely closed one to a largely open economy here in the EU,” Keane says. “In an open economy, international competitors would profit from crisis supply management by experiencing stabilised or increasing prices and respond with stable or increased production. They would love it, in other words.” A simple uniform crisis supply management policy would be inappropriate for the widely divergent price and production systems among the EU 27, he adds. Left alone, prices will recover quite quickly. “You’d be paying money to producers to have them do things that they’d do anyway,” Keane concludes.
Michel Nalet, president of the EDA, asked for stability, predictability and transparency in EU policies. “Don’t penalise those who have been preparing for post-quota,” he says.
In the post-session questioning, Keane noted the difficulty facing new entrants into dairy farming. “However, they should be encouraged, because they are the lifeblood of the industry,” he states. The panellists agreed that dairy farmers need to be given confidence during the transition to a quota-free environment.
Dairy is a whole food
The second session examined the issue of making others see dairy as a whole food with a host of benefits, and not just look at individual nutrients. Professor Jean-Michel Lecerf of the Institut Pasteur de Lille argues that milk is a natural food that contains the most nutrient diversity among all available food to humans, and he says that milk should be regarded not only as the sum of its nutrients, but that the matrix effects should be considered.
Milk is a product that offers the lowest cost source of proteins, calcium, vitamins B2 and B12. There are positive effects on human health in the area of weight management, metabolic syndrome, colorectal cancer, bone health and cardiovascular disease with dairy consumption, he notes.
Somewhat worryingly, Lecerf notes that there has been a decrease in dairy consumption over the last 10 years for certain child age groups, 3-14. “This is a big issue,” he says.
Elderly health was the subject of Dr Rosalie Dhonukshe-Wutten of Wageningen University’s presentation. “It is crucial to not only look at calcium, but also to be aware that elderly people do not consume enough vitamin D and B12 and they often have a too low energy and protein intake – both of which are very present in dairy products,” she says.
Jørgen Christensen, CEO of the Danish Dairy Board, was on hand to discuss how the studies showing dairy is good for people are not reflected in European government health policies. “We expect good treatment by the legislators, but we’re not getting it regarding EU policies,” he says. “The focus is on the negative and single nutrients, but that’s not how consumers behave. Consumers eat whole foods, not single nutrients, and focus on positives, such as taste, enjoyment and health. A negative approach towards foods and diet is confusing for consumers.” Ironically, under current EU claims regulation, companies can claim that calcium is good for bones, but can’t say that milk is good for bones, he points out and wonders, “Who will invest in innovation if they’re not able to advertise?”
The conference provided participants with as many questions as answers, but the fact that they’re asking such questions bodes well for the European landscape post-quota.
