Industry, not government, says Germany’s DBU

Industry arrangements between farms, dairies and food retailing are more effective than governmental aid packages, according to a meeting of the German Federal Environmental Foundation (DBU). It met recently about finding a path away from the current dairy crisis.

After the abolition of the EU milk quota in 2015 there was, according to Rainer Spiering, German MP, a rapid development: “The amount of milk increased as well as the amount of exporting.” It was due to investments such as enlargement and optimization of stable and milking machines. Through market-based principles, such as high supply with low demand automatically leads to price reductions, the German dairy market has fallen brutally under pressure, he says.

Frank Feuerriegel, managing director of the Dairy Industry Association Lower Saxony, looked at the international markets. “At the time, when the quota ran out in Germany, the international markets were suddenly no longer there.” He also refers to the Russian embargo and the falling demand from oil-exporting countries and China.

At the same time, a favourable food situation led to more milk production, for example in the US and New Zealand.

The vice president of the Country Population Lower Saxony – farmer union, Albert Schulte, is of the opinion that the dairy industry needs to deal with the global market situation. Meanwhile, Kees de Vries, MP and on the board of the milk producer group Barmke, sees the need to control the world market through volume control of raw milk.

Werner Wahmhoff, agronomist and head of Environmental Research and Conservation in the DBU, points to the large differences between farms in Germany. The most difficult situation is farms that have invested in larger herds and new stables and thereby have taken a big risk, while other farms can absorb losses in other production branches.

Schulte poins out that large farms will survive the crisis well. The farms dying out are especially small businesses. Spiering demands increased emphasis on the domestic markets to protect these concerns. He says, “We should think more about regional production, and where we adapt to regional operations.”

DBU moderator Heinrich Bottermann says, “In addition to the regulatory and demand policy, a support policy is one of the great management tools.”

Subsidies have been invested in livestock buildings. Government consulting for corporate development in agriculture plays a role here. As a result, most large stables are subsidised.

De Vries remarks that promotion in the past did not have the purpose of improving animal welfare. It was all about keeping the milk production stable. “And we should be exportable,” he says.

Spiering reminded the audience that the demand to abolish the quota had come from German agriculture.

“In the moment when you act as a state, you have responsibility,” he says, noting the support policy of the state should always move closely related to social interests – so the possibility for promoting grassland is there in the structural policies. “Then I’ll automatically reduce the milk yield by guidelines for the conservation of soil.” Wahmhoff warned against weaving crisis and protecting biodiversity together.

“Dairy cows requires intensive grassland,” the agronomist says, but only extensive grasslands is of particularly importance on biodiversity.

De Vries spoke in favour of a middle ground between conventional and organic agriculture. The DBU already supports projects, events and public relations with the aim to combine advantages of both forms of farming and promote a third way of sustainable agriculture.

The participants agreed that, when it came to a way out of the crisis, national aid packages are not effective toward a EU-wide crisis and in global competition.

De Vries rejects a state quota on amount, but saw opportunities for a sectoral agreement, which controls the volume of raw milk.

Feuerriegel sees a possible solution between farmers and dairies. He saw the need to serve both the export and domestic markets.

He thought it would be useful if dairies developed individual mechanisms together with the milk producers and so came to solutions that way.

Wahmhoff also saw large market opportunities for stand-alone products with regional markets, referring to meadow milk products in some retail chains.