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Frustration mounts within Swiss dairy industry

Milk farmers from Switzerland and Germany protest against dumping price exports. Keystone

Swiss mountains like the Matterhorn are famous, but the one that never appears on a postcard is the so-called “Butterberg” – made with surplus milk.

This content was published on December 1, 2011 - 14:01
Susan Vogel-Misicka, swissinfo.ch

That surplus amounted to 10,000 tons back in August, but was whittled down to 5,000 tons by late November, the milk branch organisation announced at a special assembly in Bern earlier this week.

Yet the melting heap of butter was one of the only bright spots at the assembly, where the focus was on problems within the Swiss milk industry.

The umbrella organisation represents all sectors of the industry, from dairy farmers to cheese makers to retailers. It was established after the Swiss milk market was deregulated in 2009.

On Monday it said that it would give itself just five more months to figure out whether or not it should continue.

Great expectations

The expectations of the various players within the industry put a great deal of pressure on the milk branch organisation, according to managing director Daniel Gerber.

“Expectations are extremely varied. There are still dairy farmers who expect a direct influence on the market – like quotas and consolidated prices – but that’s just not possible, also for legal reasons,” Gerber told swissinfo.ch.

What it can do is introduce stabilising measures, such as a recommended milk price. In early November the branch organisation reduced the suggested price by four cents, bringing it down to SFr0.64 ($0.69) per kilo. Though it is only a recommendation, this move was highly unpopular with dairy farmers.

The Swiss Farmers Association criticises the move. Martin Rufer, head of the association’s department of production, markets and ecology, told swissinfo.ch: “Given the difficult economic situation of the dairy farms, this is extremely problematic.”

“Although the reaction [to the price reduction]  tends to be negative, this does have a stabilising effect and that is certainly in the interest of the producers,” Gerber said.

Last straw

Yet this was the last straw for Swiss Milk, the association of Swiss milk producers. When the milk branch organisation announced its plans to sink the suggested price in September, Swiss Milk resigned from the umbrella organisation.

“We’ve found that the retailers, factories and traders earn money, but not the dairy farmers. On average they only earn SFr12 per hour. This situation is absolutely unsatisfactory, and the milk price is partly to blame,” Swiss Milk spokesman Christoph Grosjean-Sommer told swissinfo.ch.

He lamented the fact that the branch organisation’s interests were divided between two “families”: one for the producers and dealers, and another for the manufacturers.

“The dairy farmers need a mouthpiece that only looks out for their interests. If we had a voice just for us, then we would have more influence,” Grosjean-Sommer said.

Swiss Milk’s membership of the branch organisation expires at the end of 2012. The group has already withdrawn its president from the branch’s board of directors.

“A branch organisation makes sense to us, but it has to work,” Grosjean-Sommer said.

Rufer of the farmers’ association finds that the branch organisation could benefit from some structural reforms.

“In principle, it has good instruments; now they need to apply them consistently. Only then will there be a balanced milk market,” he said. He also said that Swiss Milk should strive to unify its members.

“It is essential that producers appear more cohesive,” Rufer said.

Demonstrations

“It’s a difficult economic situation. While there are still farmers that earn a good living, the reality is that a large number of dairy farmers are under a lot of economic pressure,” Gerber said.

Some of these took to the streets in Basel and Geneva on Tuesday to protest dumping prices on butter being exported. They argued that slashing prices was bad for producers on both sides of the border. They also criticised the so-called “organised overproduction” resulting from the liberalised milk market.

“It has not been possible to adjust the production volume to market opportunities. Therefore, the price pressure is constantly high. In addition, currency issues facilitate imports and hamper exports,” Rufer said.

As it stands, Swiss dairy farmers earn about SFr0.20 more per kilo of milk than their European counterparts.

Facts and Figures

Switzerland has about 25,000 dairy farmers who, along with their cows, produced 4.1 million kilos of milk in 2010.

The milk was used for:

Cheese (36%)

Animal feed (15%)

Butter (14%)

Drinking milk (12%)

Milk powder, UHT, etc. (9%)

Cream (6%)

Yoghurt (5%)

Other (3%)

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Milk consumption

In 2010, 376 kilos of milk were consumed for every person living in Switzerland.

The average person drinks 2ml of milk and eats 60g of cheese per day, plus two portions of yoghurt per week.

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