Underneath the pristine white surface of milk lies a dairy sector in crisis as small producers struggle to survive. European overproduction is driving farmers’ incomes below profitability and, as a result, preventing the development of a local dairy sector in Africa.
The European continent is one of the leading producers of milk. European Union countries produced some 172 million tonnes of milk in 2018. Outside the Union, only India can compete on this scale. But unlike India, which consumes almost all of its production locally, Europe sends a significant portion of the milk it produces abroad, making it the world’s largest exporter of dairy products. For example, in 2018, the 28 Member States exported 930,000 tonnes of milk, 989,000 tonnes of milk powder, 768,000 tonnes of cheese and 119,000 tonnes of butter. And we see these Eurostat figures increasing almost every year.
Producing some 5 million tonnes of milk in 2018, Belgian producers certainly contribute their fair share
But behind these flattering statistics hides a deep crisis. A crisis that mainly affects those at the very beginning of the dairy production chain: dairy farmers. “Producers, dairies, the dairy processing industry, traders, supermarkets, consumers… Not all of these parties share the same interests. And we, the producers, are the weakest link in the chain,” sums up Erwin Schöpges, president of the European Milk Board (EMB), the European dairy farmers association.
For the last 30 years, the milk sector has been regulated by the European Union. Previously, the EU set quotas that limited how much farmers could produce. The system was far from perfect, as evidenced in particular by the large protests of dairy farmers in 2009 following a dramatic fall in milk prices, but it had the merit of limiting overproduction. But in 2015, the milk sector was completely liberalised. No more quotas, but unchecked production instead, governed only by the law of supply and demand, creating a frantic race of dairy farmers to produce more and more.
“The producer is missing out on at least 10 cents per litre of milk sold”
The resulting overproduction led to very low prices. So low that European farmers do not obtain enough revenue from their sales to cover their production costs, let alone pay for their work, which makes them increasingly dependent on subsidies.
In 2016, under pressure from several Member States, the EU offered a voluntary and compensated volume reduction scheme for several months. It was a success, but the measure was not continued.
“In 2017, the EMB carried out a study on the costs of milk production in Belgium, also taking into account the work input on the farm,” Erwin Schöpges explains. “The farm-gate milk price should be between 43 and 45 cents per litre of raw milk. Today, the average price paid to the producer is between 30 and 33 cents. As a result, farmers fall at least 10 cents per litre short of a fair income for their work. We also deducted the subsidies from our calculations, which means that if subsidies were stopped tomorrow, they would be a further 4 to 5 cents per litre out of pocket.”
The European Milk Board’s president points out that the problems faced by Belgian producers are identical to those encountered by dairy farmers from the 16 member countries of the association, which includes Portugal, Ireland, Denmark, Italy and the Baltic countries.
One man’s loss…
But as is often the case, one man’s loss is another man’s gain. In the current market situation, major European processing and distribution groups obtain low-priced milk that allows them to achieve good profit margins, mainly on processed products (butter, cheeses, etc.) and to sell surpluses at slashed prices to the African continent.
“By eliminating milk quotas without installing crisis instruments and by further focusing farm production on large-scale exportation, the European Union serves the interests of the agro-industry to the disadvantage of European and African dairy farmers,” claim SOS Hunger, Oxfam, Veterinarians without Borders and the ‘My milk is local’ coalition when they launched their joint ‘Let’s not export our problems’ campaign asking the EU not to export its dairy overproduction en masse to Africa.
Should quotas be reintroduced then? Erwin Schöpges doesn’t think so. “Quotas, the way they were managed in the past, were simply a means of adapting production to demand. “Instead, the EMB president would like to see a series of measures in place to support dairy farmers in the decline in production, including a Market Responsibility Programme (MRP) that would monitor trends and be able to respond quickly to emerging crises. For Schöpges, “until the 45 cents are reached, production should be capped and all farmers given the opportunity to voluntarily reduce their volume by compensating them for this reduction.”
Change of mentality
A change of mentality in dairy farmers is also essential, Erwin Schöpges concedes. For they are the main drivers of European overproduction. “It’s part of the DNA of the farmer, of the human being, of wanting to produce as much as possible. When losses are suffered, the farmer has the reflex to want to compensate by increasing production. But we are trying to change that mentality, to explain that producing a little less could provide a higher income. Because when production is in balance, we have the power to negotiate with dairies and buyers.”
Erwin Schöpges also believes that this would avoid one of the major problems faced by the sector: inventory management. “The storage of milk powder is the only instrument that Europe has installed. At one time, there were 400,000 tonnes of milk powder stored all over Europe. This is more or less Belgium’s annual production. It would be much more interesting for everyone not to produce this milk powder, which one way or another will eventually get sold, and which in the meantime costs a lot of money.”
In one way or another: this often means ‘in Africa’ and ‘in powder form’. European multinationals such as Lactalis (France), Nestlé (Switzerland), Arla (Denmark) and Milcobel (Belgium) invest heavily in West Africa, a region they see as a market of the future. Milk powder reconditioning plants are multiplying but there is no promotion of local economic and social development since these plants require little manpower and are operated using raw material from Europe.
Worse still, massive imports into the African market impact local dairy chains. European milk powder, the result of production in overdrive, is sold at lower prices than fresh local milk, sometimes even half the price, and in ever greater quantities. In ten years, European exports of milk powder have doubled. According to the above-mentioned ‘Let’s not export our problems’ campaign, 90% of the milk consumed in the Malian city of Bamako, for example, comes from foreign, mainly European, milk powder.
How is that possible? Firstly, European dairy farmers benefit from EU aid. “The existence of direct payments allows increasing competitiveness of European products on the world market,” explains the study ‘Common Agricultural Policy: What consistency with the development of southern peasant agriculture’, published in 2019 by Coordination Sud[i]. “[The EU] therefore promotes the competitiveness from imports of European origin in the markets of the countries of the South.” This makes the association say that “What Europe gives with one hand, it takes away with the other”, as we will see later.
“At home (in Africa), hundreds of thousands of people live off milk production and dairy processing. These local initiatives will be threatened if imports from the EU continue to grow,” warned Christian Dovonou, the director of Veterinarians without Borders in Burkina Faso, at the launch of the ‘Let’s not export our problems’ campaign in April 2019.
It was in this context that some 15 West African producers came to Brussels to make their case to the European institutions. Mariama Dicko runs a small dairy farm in Dori, Burkina Faso. She was part of the delegation. She complained about unfair competition from Europe: “Imported milk costs less than 200 francs (CFA, ed.) and we sell local milk at 400 francs.” Worse still: “The milk that arrives in Burkina is of poor quality.”[ii]
Drink your glass of… powder… skimmed… re-fattened… palm oil milk
Powdered milk results from a dehydration process and tends to be one of three kinds: whole, semi-skimmed or skimmed. The method increases the shelf life of milk and its proteins, mineral salts and fats, so long as it has not been fully skimmed.
The latter, skimmed milk powder, and its growing export to African countries, is now much criticised. The reason being that it is more and more frequently re-fattened with vegetable oil, usually palm oil, which is much cheaper than dairy fat. Once reconditioned, it is often sold as ‘real’ milk. Since 2016, European exports of milk powder to West Africa that is then re-fattened have reportedly increased by 24%.
This practice was devised by the industry to enhance and find an outlet for skimmed milk powder, resulting from the manufacture of butter. Major European companies are therefore taking advantage of the European dairy policy and the lack of legislation to export this milk, of poor nutritional quality, to Africa. Fatty acids, mineral salts, vitamins, etc. This substitute obviously does not contain the same nutrients as whole milk. But, taking advantage of regulatory weaknesses, the industry often refrains from mentioning this in their labels or advertisements, putting the health of consumers, especially young children, at risk.
“If we were at least talking about exporting whole milk powder, we could still say that quality is at the rendezvous for African consumers,” Erwin Schöpges complains. “But this is about a product that no one in Europe would want to consume. You start to read between the lines: ‘It’s ok for Africans to drink this…’”
In addition, this ‘fake milk’ is also called into question for its ecological impact. It helps to increase the demand for palm oil, whose production is harmful to the environment since it generates intense deforestation in oil palm growing regions.
But there is good news on the horizon. Nine months after the launch of the ‘Let’s not export our problems’ campaign, the European Commission created a specific tariff line for skimmed milk powder re-fattened with vegetable fats blend (VFB). This specific tariff line will make it possible to monitor the VFB powder mix exported from the European Union, to determine which countries are exporting it, to make this information public, and to observe how this trade evolves. The first figures were expected during the course of 2020.
Fair-trade milk, a lifeline for Belgian producers…
In an attempt to remedy the problems of today’s dairy system, several brands of so-called ‘fair’ milk have been created in recent years. ‘Who’s the boss?’ is one of them. It was launched in 2016 in France and the initiative was extended to Belgium in 2017. The concept? It is the consumers who create the brand. When it was launched in Belgium, 5,300 Belgians responded to an online questionnaire that was used to establish the specifications to be respected: correct remuneration for the producer, milk collected and packaged in Belgium, cows grazing for at least a third of the year and fed no GMOs, and fodder promoting omega 3-rich milk. “It’s a collective approach that makes consumers choose what they want to consume and puts at the centre of the topic the fact that supermarket price wars and promotions force producers to lower their prices,” explained Sylviane Bockourt, one of the brand’s drivers, in early 2018[i]. A partnership has been established between the brand and the CoFerme dairy cooperative, which brings together 175 producers in the Chimay region, and which has set its own selling price at 38 cents per litre of milk.
Another, more producer-oriented brand is Fairebel. This brand’s cooperative was created ten years ago in Belgium and now brings together some 500 farmers. It aims to support sustainable and family-friendly agriculture by selling more expensive dairy products (milk, butter, cheese, ice cream) but guaranteeing producers an income of 45 cents per litre.
In addition to his role as president of the European Milk Board, Erwin Schöpges is also the president of Fairebel and its cooperative Fairecoop. “Our goal was to create a brand, a label that belongs to the agricultural world and through which the consumer has the opportunity to support local producers. In return for the 45 cents, we put farmers in touch with the consumer, so that they can explain the situation in the dairy sector and demonstrate their know-how.” In 2019, Fairebel sold around 11 million litres of milk.
A special feature of Fairebel: until now, the cartons of the brand did not contain the actual milk of the cooperative’s members. Its products are actually manufactured and packaged by the Luxembourg company Luxlait. Luxlait is bound by a volume trading obligation and must buy on the Belgian market an amount of milk equivalent to the volume produced by Fairebel cooperative members. The farmers deliver their production to their usual dairy and Faircoop pays them the difference up to the 45 cents per litre. “It’s the same approach as green energy,” Erwin Schöpges summarise[ii].
“If you buy green electricity, it’s not the actual wind turbine energy that comes directly to your house.” But since 1 January 2020, the milk of some members of the cooperative has been collected to end up specifically in Fairebel milk cartons.
Since October 2019, the cocoa in Fairebel chocolate milk has been Fairtrade certified, guaranteeing a better price for cocoa farmers. For every product sold, 1 cent goes towards the Fairtrade premium that certified cooperatives receive. Another cent goes to the ‘Women School of Leadership’ project in Côte d’Ivoire. This school was set up by Fairtrade Africa to strengthen women’s economic empowerment, encourage and train them to participate in the management of producer organisations.
… in Europe
The concept of Fairebel is also available elsewhere in Europe. “The same initiative exists in France, under the name ‘FaireFrance’, in Luxembourg, in Germany… In total, it is present in six European countries,” adds Erwin Schöpges. “The idea was born in Austria and the European Milk Board picked up the concept and made it available to its members.”
… in Burkina
And since 2018, it is no longer limited to the European continent. FaireFaso is a similar label developed in Burkina Faso, on the initiative of Burkinabe and Belgian producers. It is supported by Oxfam Solidarity and the 11.11.11 campaign.
“We’re trying to do there what we’re trying to do here: make sure that farmers can communicate with consumers and promote their products to them,” explains Erwin Schöpges.
The FaireFaso label is “a strong symbol,” Ibrahim Diallo, president of the National Union of Mini-Dairy and Local Milk Producers of Burkina Faso (UMPL-B), confirmed shortly after its launch. “It identifies a quality product sold at a fair price. There is a real demand for quality milk in the face of imported powdered milk. There is an outpouring of patriotism in the country right now and consumers are proud when presented with national products. The timing of the FaireFaso label is spot on. The success is such that we can’t keep up with demand!”[i]
Miriam Diaby, who runs a dairy, gives a concrete example of the change. “Before, women poured milk into gourds and walked from house to house to sell it. There were issues with wasting time, milk turning sour and safety. All this to earn 200 CFA francs a day. Today, thanks to the dairy, women earn no less than 200,000 CFA francs per month. Even some public servants don’t earn that much.”
The 63 mini-dairies of the UMPL-B process more than one million litres of milk powder, yoghurt, cheese, butter and Gapal (a mixture of yoghurt and millet flour) and sell their products under the FaireFaso brand.
… and in other West African countries
And the concept is now about to be developed in other West African countries. “I visited Senegal and Mali in 2019. We hope to succeed in launching FaireSen and FaireMali,” said Erwin Schöpges, Fairebel’s president. “In Niger too, people want to start the project. I hope to be able to go there in the coming months to find reliable local partners.”
However, the success of initiatives such as FaireFaso also depends on the support of local authorities to compete with imported reconstituted milk. That is why Oxfam Solidarity and the 11.11.11 campaign support small producers in their political advocacy work. A concrete example of a policy choice that can make a difference: giving local producers access to school canteens.
Erwin Schöpges recalls that other African countries, such as Kenya or South Africa, have managed to protect their dairy chains from massive imports, thanks to state support. “These countries have chosen food independence, that is, they have protected their local markets and have spent a lot of money to foster domestic production. Look at the money Europe is putting in to support food production through the Common Agricultural Policy (CAP). If the African countries put the same kind of resources into their local channels, I am convinced that they could develop there.”
“West Africa has great potential for dairy products,” confirms Amadou Hindatou, head of the ‘My milk is local’ campaign launched in 2018 in Burkina Faso, Mali, Mauritania, Niger, Senegal and Chad by the Association for the Promotion of Livestock in the Sahel and the Savanna. “This is why our Association is calling for increased customs protection. We call for a common ECOWAS (Economic Community of West African States) external tariff to be raised on milk powder and vegetable oil mixture from 5% to 30%, that local milk be exempt from VAT, (…) that economic partnership agreements (EPAs) with the EU be reviewed, (…) and that multinationals that process milk powder in Africa are transparent on traceability and incorporate a minimum percentage of local milk,” explained Hindatou[i].
François Gaas, a member of the organisation SOS Hunger shares this view, even though he believes that imports should not be condemned as a whole, because local supply cannot currently meet demand. “There must be a balance and cheap imports must not dominate. There is also a need to support local structures through the development cooperation policy, as dairy production represents a great potential for jobs and income opportunities,” he explained.[ii]
Furthermore, well-developed local dairy and agricultural production is the best protection against poverty, rural exodus, and even large migratory movements or radicalism.
The Belgian State, through its development agency Enabel, also supports several projects in West Africa. “These programmes are the result of bilateral agreements between the Belgian government and the states in question,” explains Sofie Van Waeyenberge, Enabel’s agricultural development coordinator. “Negotiations take place at the political level and this leads to the development of a strategic framework (priorities, budget, etc.). Once this framework is established, the initiative arrives with us and it is our role to implement it.”
“We are always trying to take systemic approaches,” continues the coordinator. “We analyse the context of a given system, target its dysfunction and finally implement changes in a participatory way with the different actors on the ground.”
In Mali, the AREP-K intervention (Support for the Strengthening of Livestock and Pastoral Economy in the Koulikoro Region) seeks to support the development of livestock in four areas of Koulikoro, while
promoting entrepreneurship and job creation, especially for the benefit of women. To do this, its objective is to strengthen the supply of services to producers through partnerships between breeder associations, communities, technical services and private operators. In the long run, the gradual improvement in the way competitive value chains work should ensure better agro-pastoral value creation in the region and eventually help foster its socio-economic development.
In Niger, Enabel launched the Programme Supporting the Development of Livestock Breeding (PRADEL) in January 2018. It is now embarking on a second phase called Entrepreneurship Support Strategy for the Development of the Livestock-Meat, Milk and Aviculture value chains (DSAE PRADEL) in the Tahoua and Dosso regions. PRADEL concentrates its activities around nine value chains, including the production of cow’s milk and fresh camel milk. The issue is to increase the productivity and competitiveness of the value chains in order to meet the real demand currently covered by the reconstituted milk of the industry. This increased productivity requires quality feeding of livestock, supplementing lactating cows, increasing the number of breeders, monitoring health, etc.
Finally, in Mauritania, where milk from pastoral cattle and camels is one of the main pillars of food, the Belgian development agency is implementing a project promoting sustainable agricultural and pastoral value chains (RIMFIL). It is funded by the European Development Fund (EDF) and aims to promote the development of the value chains in households and communities. The project’s proponents hope that once it is completed, it will have enabled the value chains to be better structured, that infrastructure and equipment for collecting, processing, packaging and selling local products will be effective, that public policies for the development of Mauritanian products are developed, and that the legal framework for trade is improved.
For each of these programmes, Enabel has an on-site team, made up of Belgian and international experts who work with many partners. “Governmental or public institutions are privileged partners for us,” Sofie Van Waeyenberge explains further. “But we work with all the important players in the sector we are targeting: breeders’ federations, producer organisations, NGOs, etc. The latter complement our actions very well, particularly in the area of policy advocacy work, which is not part of our remit.”
“Together, we often act in a very, very complex environment. That’s why we always try to be flexible when implementing our programmes, because there are always a number of things that we have no control over,” concludes the Enabel coordinator.
Each of the projects implemented is financed to the tune of several million euros. End-to-end, that’s tens of millions. How much on a European scale? However, the financial and human resources deployed to develop and support local dairy value chains in Africa are being undermined by overproduction which also originates in Europe… And we cannot even say that this situation benefits the producers in Europe since they fail to generate decent incomes.
The large distribution and processing companies, as well as the consumers, are among the beneficiaries of this low-priced milk system currently in place. The real power to make things change lies in the hands of consumers, in the buying decisions they make. In Europe as in Africa, alternatives now exist to enable consumers to choose another path. Ultimately, it will be up to consumers to decide the conditions under which they want their milk to pass from the cow’s udder to their cup, and what the final quality will be.
The vicious circle of hyper-globalization of milk, explained by Erwin Schöpges
“Europe is experiencing an overproduction of milk. This does not prevent producers from continuing to import soy, which stimulates milk production, to feed their cows. This soya often comes from Brazil, where its cultivation leads to deforestation. The same phenomenon occurs with palm oil, which often comes from Indonesia, and which industrialists use to re-fatten the skimmed milk powder that results from the manufacture of butter. Then, this mixture is sent to Africa…
When you analyze this circle, it’s completely crazy, and it doesn’t make any sense. If we could put an end to this hyper-globalization, I think everyone would be better off: it would be good for the climate, for producers and for consumers. »