Comment low milk prices: land grabbing in the middle of germany

The Minister of Agriculture prefers to make pacts with large dairies instead of taking care of the farmers. It’s true: the federal government is betting on the demise of farms.

The market doesn’t make it: milk production on a farm Photo: dpa

If politicians are to be judged by the realization of their goals, then Agriculture Minister Christian Schmidt (CSU) is the high performer of the federal cabinet: this is evident in the milk crisis. For when, before the abolition of the quota system, critical organizations such as the Arbeitsgemeinschaft bauerlicher Landwirtschaft (AbL) and the Bundesverband Deutscher Milchviehhalter (BDM) warned of price collapses and proposed new, smarter instruments for volume control, he rejected them.

The aim of these would be merely "to preserve as many dairy farms as possible," explained Schmidt’s technical advisor. Such plans would "inhibit structural change", an "efficient allocation of resources", i.e. accumulation of land ownership and production, would fail to materialize. "The federal government is betting on the death of farms," is how Lower Saxony’s Minister of Agriculture Christian Meyer (Greens) translates it. He is probably right.

Because Schmidt’s stonewalling has since caused the market crisis to take on catastrophic proportions: Since the end of the quota, the producer price has plummeted. Lower Saxony’s dairies already announced payout prices of 19 cents per kilo at the end of April. At the same time, the average full costs of production are 40 cents, even for so-called high-performing farms with over 100 cows in the Gunst region, i.e. the region where production costs are lowest. No farm can sustain that.

The agricultural ministers of the federal states had then called for intervention, but on condition of volume reductions: Only those who contribute to relieving the oversaturated market should also be supported. France is promoting a similar model for Europe.

But Schmidt wants nothing to do with this. He prefers to continue to make pacts with the large dairies and, at a milk summit free of critics, to make deals with the agribusiness-oriented farmers’ association on how farms that have invested massively – in giant barns and fully automated feeding without grazing – can be saved over time without imposing conditions.

Skeptics are told the fairy tale of Russian exports as an explanation for the price crash. In the best year of 2013, Russian exports accounted for 2 per mill of EU milk production. And the exports were mostly cheap cheese.

No, the fact that Moscow is giving up German processed cheese does not shake the agricultural markets: No farmer in Esens has to give up his farm for this. The reason is rather that Germany has an agriculture minister who wants to get rid of the farmers and aims at an unrestrained allocation of resources – de facto land grabbing.

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