International Dairy Coalition Warns European Union Against Market-Distorting Tactics
June 2, 2020
NMPF joined with the U.S. Dairy Export Council (USDEC) in May to spearhead a joint message from farmer organizations and dairy processors throughout the Americas warning the European Union against prolonging already challenging market conditions by repeating the inventory-building and extended market-price suppression it engaged in just a few short years ago.
These market-distorting practices in the past have caused significant harm to the U.S. dairy industry as well as the broader global dairy market.
EU interventions in 2016-17 led to it holding as much as the equivalent of 16 percent of the global skim milk powder (SMP) market in government storage. It then released the product on the world market over the next two years, unfairly harming the global dairy industry by undercutting prices.
This time, with the EU poised to begin government-financed intervention purchases of SMP and butter, dairy organizations from Argentina, Belize, Brazil, Chile, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Uruguay and the United States issued a press release urging the EU to immediately change course and “act now to put a long-term plan into place regarding how to handle its government-incentivized stockpiling given that the EU has a demonstrated history of dumping intervention purchases in a way that disrupts the world dairy market.”
Exporting large quantities of government-purchased SMP and butter at below-market rates onto the world market would artificially distort prices for an extended period and displace commercial competition. NMPF and the dairy coalition instead are urging the EU to adopt measures that further spur consumption within the EU and encourage its producers to implement appropriate production practices to survive during this difficult time.
“Farmers and dairy processors in our countries and many others around the globe are already in the fight of their lives, working hard every day to help keep the world well-nourished through this crisis,” the dairy organizations said. Without an EU commitment to avoid distorting global markets, “the more farmers and processors outside the EU could be forced to close their doors.”