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Economic Analysis Shows Damage of EU Milk Intervention

July 2, 2020

A new economic analysis released June 18 has found that the European Union’s government-financed intervention purchases of skim milk powder (SMP) in 2016-2019 caused serious damage to the U.S. dairy industry – an important concern given the EU’s capacity to revive usage of this program while dairy markets are still recovering from the coronavirus crisis.

The earlier intervention, which the analysis found suppressed an economic recovery in milk prices and allowed the EU to seize market share, cost U.S. dairy farmers $2.2 billion between 2018 and 2019, according to the analysis conducted by Kenneth Bailey, Ph.D. and Megan Mao, B.S., from Darigold, a wholly owned subsidiary of the Northwest Dairy Association based in Seattle.

“This report puts into hard numbers the bitter truth that U.S. dairy farmers already know: the EU’s dump of intervention stocks onto the world market depressed farm-gate milk prices in the U.S. in 2018 and 2019,” NMPF President and CEO Jim Mulhern said.

The report comes as the EU Intervention Program is reopening for purchases in response to sluggish demand. NMPF is working to ensure that the EU does not again use it to undermine the global dairy market.

“Now, as farmers and cooperatives are working tirelessly amid a global pandemic to keep an essential food ingredient moving to those markets that need it most, it’s time to do the advance work necessary to ensure we don’t see a repeat of those harmful impacts from EU Intervention policy in the future,” Mulhern said. “The EU SMP Intervention Program needs serious reforms and the Administration should examine the best tools at its disposal to help drive that needed change.”

NMPF recently worked with USDEC in leading a global coalition of dairy groups in a joint statement warning against the EU’s market-distorting practices.

The leading U.S. dairy groups, including NMPF, also sent a letter to the office of the United States Trade Representative (USTR) to call immediate attention to the need to investigate the EU’s SMP Intervention Program and prevent the dumping of EU-purchased SMP through any means available to the U.S. government.