29. April 2017
Eyes on Europe

A European Milk Fairytale or how the EU is Destroying African Markets

A European Milk Fairytale or how the EU is Destroying African Markets

 

On January 23rd European milk farmers sprayed milk powder at the EU Council in Brussels. By this act, they showed their protest against the low milk prices, destroying local farmers. However, this milk powder was probably supposed to leave European frontiers for exports…

 

© artemtation (pixabay)

© artemtation (pixabay)

 

Globalization at its glance

 

About 8500 years ago, somewhere in Southern Eastern Europe people began to domesticate goats and sheep. This period, also known as the Neolithic revolution, constitutes the beginning of dairy farming in Europe. Ever since Milk consumption worldwide has been growing consistently at a high rate, but above-average in the form of processed dairy products. Nowadays, the EU, together with New Zealand, is the biggest milk producer and exporter worldwide. New outlets are desperately sought in a world where competition and competitiveness play a leading role. Milk, produced in the EU can be found all over the world, also on the African West Coast. There, it is sold much cheaper than local milk. The consequences of it: destruction of the local dairy farming production.

 

 

European Milk Policy

 

The Common Agriculture Policy (CAP) constitutes the oldest and biggest financial sector of the EU. At the end of world war II, the continent was from devastated, hungry, and poor. Therefore, the policy has been, from its very beginning, equipped with considerable funds. Almost 70% of then Community’s budget was made available to the CAP (today 37%). Quite rapidly, success stories were written. Due to massive subsidies programs, immense surpluses were reached by the 70’s. Several reforms followed, including on quotas so as to lower the waste and to keep prices stable, accompanied by compensations payments to soften income loses. In the 90’s, international pressure became stronger, interventionist programs were gradually phased out and the liberal agenda reached the CAP. Ever since each reform of the CAP made a further step towards liberalization. In the meantime, a green pillar was instated to compensate for the damages done by the tremendous agricultural production.

 

The latest reforms have brought along disastrous consequences for farmers all around the world, including within Europe. In 2008, an expiration date for milk quotas was set for 2015. Before this reform farmers were only allowed to sell a certain amount of milk, which guaranteed a certain degree of price stability. However, overproduction remained a problem.  But, at least officially, milk couldn’t be sold and, as a result, was stored, often in forms of milk powder which has a longer hang than liquid milk. Financed by the EU, the storage however turned out to become into an increasing financial burden (Germanwatch 2015). The warnings of the European Court of Auditors, explaining that a further liberalized World market oriented milk policy would lead to loss of farms, were ignored by European agricultural policy’s decidors. Both the European Commission and the majority in the Council of the European Union agreed on the necessary decision to discontinue the quotas without replacement. From then on, farmers were able to sell even more surplus on the international market, including the west coast of Africa.

 

 

African milk vs European milk

 

On average, 20% of the EU milk surplus travels 7000 kilometers in form of milk-powder to the southern area of the Sahel zone. There, it replaced local dairy products in the supermarkets. In Guinea-Bissau, Mauretania, Senegal, Ghana, Togo and Cameroon Milk is a basic stable. It is either consumed fresh as drinking milk or, more often, converted into yoghurt. Almost every rice meal comes with it. At first sight it hence suggest that the EU milk-sector could contribute to a healthy economic development, notably by generating jobs. Yet, dairy farmers in this region cannot compete with European prices. In Cameroon, a local farmer sells its milk for 37 cents, while a German farmer sells it for 22 cents per liter. A German yoghurt costs about 33 cents in Cameroon’s supermarkets, cheaper than Cameroonian yoghurt (Germanwatch 2015).

 

 

Linking policy areas: the CAP and development cooperation

 

The EU and its Member States are also devoted to reduce poverty and enhance development, especially on the African continent. Billions of Euros are spent to this end. In the agreement on the economic partnership with West Africa, the EU expresses its willingness to boost economic development through trade: exports worth 31 billion Euros are entering the West African market annually (European Commission 2015). The stated goal to integrate this region into the world market is however affected by many problems, which prevent the development of an African internal and competitive market. It also destroys local agriculture. One of those structural problems is the European Common Agricultural Policy. Milk, one export product out of many, is a striking example of fatal consequences of an utterly misplaced development policy. European products are sold on markets that could produce the exact same products on their own, internally, and that so solely by reason that we are overproducing milk and that it brings us little economic return. Simultaneously and rather counter-productively, the EU opened programs to construct dairy companies in West- and Central Afrika in 2012 (European Commission 2016). Hundreds of thousands of euros were dedicated to support small dairy farms and cooperatives so as to create incentives to increase productivity, competitiveness, and sustainability. Dairy farms were constructed without ever being put in operation. At the same time, highly subsided milk is exported to this region. When confronted to this problematic Phil Hogan, Commissioner for Agriculture and Rural Development, argued that, apparently, the problem doesn’t lay within European agricultural policy and that therefore no action is required. He suggests, instead, to send Europeans to train local people to use the machines.

 

 

The moral in the story

 

Hogan’s position reflects a wider fourfold problem. Firstly, abolishing quotas and over-production further increases deterioration of milk prices worldwide.  Due to that, both milk-farmers in Europe and Africa go bankrupt. Secondly, goals formulated and money spent to address poverty in developing and emerging nations are rendered useless. Thirdly, European arrogance and ignorance towards non-Europeans risks to, eventually, backfire. One hardly sees how, in a given region and sector where people cannot find work by reason of EU rules, it can develop economically. Economic refugees might be an inevitable consequence of it.

 

To sum up, bundled forces and combined strength has put the EU in a comfortable situation. Not only are the needs satisfied, but also are surpluses produced. Despite several efforts to reform the CAP by reducing the interventionist policies and providing additional money to make up for excessive use and over-exploitation of agricultural land, the export strategy remains unchanged – at the expense of local farmers in poorer countries.

 

Camille Nessel is Master Student in European Studies at the IEE