OUR DAIRY FARMERS ARE DROWNING IN THE EU MILK LAKE

The Sunday Telegraph
Christopher Booker's Notebook
26 October 2003, p. 16

Last Wednesday more than 1,000 dairy farmers closed down five Asda milk distribution centres, from Scotland to south Wales. In the past month desperate farmers have been staging similar protests in a campaign to persuade supermarkets to increase the price they pay for milk by 2p a litre, and halt the haemorrhaging of their industry which for the past two years has seen hundreds of dairy farmers a month going out of business.

What the farmers cannot understand is how the supermarkets can force them to take a loss on every litre they produce. Why is Britain's milk price, at 17p a litre, the lowest in Europe when, in terms of yields, Britain's dairy industry is the most efficient?

Some time back David Goddard, who farms near Tewkesbury and has a herd of 130 pedigree Holsteins each producing 8,400 litres a year, was astonished to read in the Irish Examiner about an Irish farmer who makes a comfortable living from a herd of 30 cows, each yielding only 6,000 litres.

How could the Irish survive on production levels that Britain left behind in the 1960s, when British farmers with cows 30 per cent more efficient are being driven to bankruptcy?

The glib answer given by many commentators is that Britain must have a milk surplus, thus driving down the price. But last year the UK's consumption of milk and dairy products was only just less than our production, and we exported £530-million-worth into the bargain.

It is true there is a huge surplus of milk, but it is not in the UK, it is in the rest of the EU: an annual surplus of 30 million tonnes, more than twice the UK's production of 13.9 million tonnes. This is how the supermarkets can keep the price down - because other EU countries are awash with milk, produced less efficiently by farmers who receive much more financial help from their governments.

Under the EU's quota system, first introduced in 1984 to curb runaway milk surpluses, the UK is only permitted to produce 14 million tonnes a year, slightly more than we consume. Germany, which consumes less milk than Britain - only 11.2 million tonnes - has twice as many cows and is permitted to produce 28 million tonnes.

France, which consumes even less (8 million tonnes) is allowed by Brussels to produce 24 million tonnes, three times as much as she can use. France and Germany alone thus account for the entire EU surplus.

Furthermore, dairy farmers in other EU countries receive all kinds of government help, from tax breaks to guaranteed intervention prices. So, even though the UK exports half a billion pounds-worth of dairy products a year, we import twice that amount.

The very fact that these cheaper imports are available allows our supermarkets to squeeze the prices paid to British farmers below their cost of production.

Oxfam estimates that the EU dairy sector benefits in one way or another from £16 billion of subsidies a year, equivalent to half the total spending on the Common Agricultural Policy. This includes subsidies on crops for cattle feed and those export subsidies which allow EU farmers to dump their products so damagingly on the Third World.

The real reason for the disaster engulfing Britain's dairy farmers is not what Mr Blair called the "armlock" of the supermarkets. It is the fact that the EU system creates that obscene surplus. And the UK Government does nothing to protect our dairy farmers - the most efficient in Europe - from the consequences of that glut, so that more than 2,000 of them every year go out of business.