Don't throw milk away, EU tells angry farmers

Fri May 30, 2008 12:02pm EDT

(Adds Latvian protest in paragraphs 5-7)

By Jeremy Smith

BRUSSELS, May 30 (Reuters) - European farmers angered by sharp falls in milk prices should negotiate with dairy processors and not dump milk when parts of the world are suffering food shortages, the EU executive said on Friday. "Throwing milk away at a time when parts of the world are experiencing a food crisis seems to be rather a paradoxical activity," one European Commission official said.

"Instead of battling with the processors, farmers should sit around the table with them in order to determine the appropriate level of production and the right price," the official said.

Thousands of dairy farmers in several EU countries, notably in Belgium, Germany and the Netherlands, have protested recently over dramatic falls in local milk prices.

Farmers in the Baltic state of Latvia gave away milk for free on Friday in protest at what they see as government inaction to help them face a fall in prices.

"We do not want what happened to the sugar industry to happen to milk farmers as well," shouted one of the protesters at a rally of several hundred people in a central square in Latvian capital Riga.

He was referring to Latvia closing its remaining sugar factory after the Baltic state joined the EU in 2004.

Earlier this week, irate German farmers carried out a series of stunts such as feeding milk to calves in public and pouring milk on fields as fertiliser. And in the Netherlands, farmers sprayed milk over fields and blocked one dairy plant.

They have blamed the price falls on an EU decision made in April to raise national milk production quotas by two percent, a move aimed at calming soaring prices and meet rising demand.

Commission experts said average EU milk prices were still higher than in 2007 and were increasing last week, albeit only slightly. Also, there were large price differences between EU countries since contracts were continuously being renewed.

But the recent milk protests were a strong signal from farmers that milk production margins -- milk price, minus the costs of feed, fertilizer and energy -- were under pressure.

"This development is ... a normal development in the marketplace, like we have seen in recent months in the pig sector," the official said, adding that many farmers seemed to view quota levels as output targets, irrespective of the market.

"This is irrational from an economic point of view. And the result -- milk-flooded fields -- is an irrational answer to that," he said.

Last week, the Commission proposed gradual rises in milk production quotas before the subsidised scheme expires in 2015 as part of the EU's 2003 major farm reform. The annual rises, suggested at one percent, would begin in 2009.

(Additional reporting by Patrick Lannin in Riga)

(Editing by Peter Blackburn)



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