Additional crisis instrument: the Market Responsibility Programme
30 cents in France, 25 cents in Belgium and now only about 20 cents in
Lithuania: the milk price is in free fall in Europe. At the same time the milk lake
is growing.
EMB and BDM
Some 7.5 million tons more were produced by the European dairy
farmers in 2014 than in the year before. More and more indications, then, of a
crisis like that of 2009. “Production is totally ignoring the market”, says EMB President Romuald Schaber. That is why it is even more important for the EMB that the policymakers implement the Market Responsibility Programme (MRP) co-developed
with the German Dairy Farmers Association (BDM). The idea is for this
programme to help prevent crises starting in the first place. It does so by
observing and reacting to the market, and combining this with a three-phase
programme.
MRP and crisis
This is how the Market Responsibility Programme works. In concrete terms: if the market index worked out from the development of product quotations, milk prices and production costs falls to a critical level, an early warning (phase 1) is issued. In phase 2 there are the three following options for a dairy farm: increase production despite the crisis, putting greater pressure on the market. A second option is for the farm to keep production constant. A third option is a voluntary restraint on supply. Should the crisis still worsen, in phase 3 the MRP provides for a compulsory decrease in production volume of, say, 2–3% per farm. This restores balance to the market and the crisis is stopped. Normal production can be resumed. It is all based on a bonus-malus system. This means that farms which increase production despite the crisis must make a co-responsibility contribution for their anti-market behaviour. On the other hand, farmers who restrict their production and thus help bring the crisis to a swift end receive financial compensation. “Had an additional crisis instrument like the MRP already been put in place, we would not have had this drastic price collapse now”, says Romuald Schaber.
The Market Responsibility Programme
Hanna Vauchelle, EMB
