05/28/2008

The World from Berlin

'I'd Rather Toss Out My Milk'

German dairy farmers have had enough. Complaining about low prices dictated by supermarket chains, they are dumping out their product rather than selling it to dairies. Farmers across Europe are joining them, but German commentators say the protest is futile.

It was only last summer that people were marveling at how milk was pricier than oil. Since then, things have changed drastically. Oil has skyrocketed to previously unimaginable costs, and the price of milk has fallen through the cowshed floor.

Germany's dairy farmers have taken a big hit from the price collapse, and now they have decided that enough is enough. On Tuesday, thousands of dairy farmers across Germany started a delivery strike. Rather than taking milk to dairies for processing and further distribution, the farmers are feeding it to their calves and using it to fertilize their fields.

"I'd rather toss my milk out than give it to the dairy as a present," Christine Schneebichler, a farmer from near Munich told the Associated Press.

In late April, German dairy farmers reacted furiously to the decision by leading German supermarket chains Lidl, Aldi and Rewe to reduce the price of milk from €0.73 ($1.15) to €0.61 ($0.96) per liter. Farmers accused the large supermarket chains of exploiting their market dominance to dictate prices.

And the large supermarket chains aren't the only problem the farmers face. On the one hand, they feel the price of milk should be raised to take into account rises in production costs resulting from increases in fuel and feed prices. On the other, they don't feel they get a fair percentage of the profits that the dairies make from re-selling the milk the farmers sell to them. Dairies currently purchase the milk for between €0.27 ($0.42) and €0.35 ($0.55) per liter. Farmers would like to see that rise to €0.40 ($0.63) per liter.

According to the Association of the German Dairy Industry (MIV), however, dairy prices have fallen recently due to over supply and because of a weakening demand following last year's high prices.

Wholesalers and the dairy industry seem hardly worried about the protest action. "There doesn't seem to be a huge wave of protest developing," Michael Brandl, spokesman for MIV, told the AP. "In any case, supply to the consumer will not be affected."

The farmers, for their part, intend to stand firm. "We are determined to only restart delivery once we are being paid prices that cover our costs," says Romuald Schaber, head of the German Federal Dairy Farmers Association (BDM). On Wednesday, the association announced that it was looking into the possibility of donating the milk that goes undelivered to the needy. Deputy head of the BDM told SPIEGEL ONLINE that he was looking into potential legal barriers to the plan.

At the same time, the farmers' protest is spreading across Europe. On Wednesday, dairy farmers in the Netherlands, Switzerland, Austria, Belgium, Luxembourg and parts of France joined their German counterparts with their own delivery boycotts. Seita van Keimpema, head of the Dutch Dairymen Board and vice president of the European Milk Board told farmers to dump their milk in the fields.

Despite the tough talk, German commentators don't predict that the farmers' hopes will be met:

The center-left Süddeutsche Zeitung writes:

"In an age where people all over the world are suffering from hunger because the food supply is not dependable, images like these are hard to bear: German farmers milking their cows and then immediately dumping the milk into the liquid manure tanks. … Whoever does that must either be crazy or in a very difficult situation."

"The farmers don't have a chance against the market. The farmers aren't in the driver's seat when it comes to negotiating the price of milk. Rather, the large dairy corporations and the powerful grocery chains have the power. A diktat rather than a fair price is the result. The only tool left to the farmers is a delivery boycott in an effort to constrict supplies to raise prices. But even if that works, there is no long-term solution in sight."

The center-right Frankfurter Allgemeine Zeitung writes:

"(German dairy farmers) would like to raise milk prices because wheat and other types of feed have gotten more expensive. Right now, though, the market is not going to allow that -- and not because Aldi and other huge companies will prevent it with their market power. Rather, there's just too much milk. It is simple market mechanics: When prices rose sharply last year, less was consumed and more was produced, despite the milk quotas. … The farmers should really be able to understand this latest cycle. Instead, they behave as if there is still an EU planned economy with intervention prices. The boycott is an ill-advised act of desperation. Sure, the farmers can feed the milk to their calves for a few days, but at some point they're just going to have to dump it out. That's not going to change the difficult market, but it will damage the image of the farming community."

-- Josh Ward, 12:15 p.m. CET

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