Commission raises alarm over dairy supply chain imbalances
28 July 2009
In a report published this week, the EU Commission said consumer prices of dairy products have fallen some 2 per cent since the end of 2007, while commodity milk prices have dropped 31 per cent and butter prices have declined 39 per cent.
The Commission report concluded that the "EU dairy supply chain does not function efficiently."
The stability of consumer prices hinders the recovery of the dairy sector by preventing demand from increasing, and pushing producer prices back up.
Furthermore, the gulf between producer and consumer prices is resulting in a distribution of gains from production that was questioned by the Commission.
"This situation also raises serious concerns regarding the distribution of value-added in the chain between farmers, milk processing factories, the dairy industry and retailers," stated the report.
Milk producer prices are now so low that many farmers are finding it difficult to cover production costs, according to the European Milk Board, which represents EU farmers.
Meanwhile, dairy product manufacturers farther up the supply chain are showing robust financial results.
Full story
