Germany pledges at least €100m in aid for dairy farmers

May 31, 2016 | 10:29

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The German government will put at least 100 million euros (US$111 million) on the table to help milk producers cope with plunging prices that are threatening their livelihoods, the minister for agriculture said Monday.

Dairy farmers are seeing their margins squeezed by slumping prices as supply outstrips demand across the world AFP/John MacDougall

BERLIN: The German government will put at least 100 million euros (US$111 million) on the table to help milk producers cope with plunging prices that are threatening their livelihoods, the minister for agriculture said Monday (May 30).

"We will provide financial support to producers in the short term," said Christian Schmidt during a press conference in Berlin.

The federal government will make available "100 million euros plus X" in direct aid and tax benefits, Schmidt said, adding that he was planning to discuss with Brussels "how much the sum X could be".

Thousands of farmers are seeing their margins squeezed by slumping prices as supply outstrips demand all across the world.

Since the end of last year, when Europe scrapped its quota system that had been in place for three decades, many dairy farmers in Germany had ramped up production.

But the export market proved to have a far smaller appetite than promised, as slowing economic growth in large emerging countries cut demand.

Russia, a big consumer of German cheese, was also boycotting European produce in the row over Ukraine's war. As a result, prices have fallen sharply.

Led by discount chains, many German distributors have cut the retail price of milk to 0.46 euros (US$0.52) per litre, leaving producers with a revenue of less than 20 cents a litre - which they argue is simply not profitable.

Germany is the EU's biggest dairy producer, with 70,000 farmers producing 33 million tonnes a year. The production structure is very varied, ranging from smallhold farms in the south to large-scale ones with several hundreds of cows each in the north.

AFP

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