Farmers are not so much crying over spilt milk as weeping about the current production coming from their cows and the prices they are getting for it.
Milk prices have fallen to just over six crowns a litre, according to the business daily E15. That’s a low for the past seven years and when such prices were last reached farmers reacted by pouring their production down the drains.
Farmers themselves appear to be giving a mixed message on whether the prices fall will continue. The Czech and Moravian Dairy Association suggests that prices should not drop lower over the next two months because the Autumn and Winter period is now approaching when higher quality milk is produced.
But the Agricultural Chamber is more cautious. Officials there say that there are no signals from developments over the last two months to suggest that there will be a rebound in prices.
They, rather, bet on a stagnation of prices and possible advance later to around seven crowns a litre if world developments help the recovery. They are looking for some big producers, Australia, to cut production and a pick up in demand for dairy products from China and other Asian countries.
The chamber estimates that Czech milk producers will this lose out to the tune of 9 billion crowns from the low milk prices. Ministry of Agriculture estimates are a lot lower at around 7.0 billion crowns without them taking into account the help and aid packages already offered.
In July, European agricultural ministers earmarked 350 million euros to help dairy farmers deal with the low prices. The Czech share of that total comes to around 10.3 billion euros or around 275 million crowns. The agriculture ministry moved to top up that figure with the promise of an equal amount of funding for its budget.
Around 150 million euros was also promised by Brussels to encourage Europe’s dairy farmer to cut their production. The Czech agriculture minister said he feared that incentive might encourage local farmers to quit dairy farming altogether.
Two of the basic problems for the low prices and too much milk production chasing too few buyers can fairly easily be found in the EU’s own policies. EU farm ministers on the one hand decided to liberalise the European milk market early last year by removing the production quotas that had long held production and demand in some sort of balance. Russian sanctions against the EU, in return for its punitive measures over Ukraine, have also banned exports of EU dairy products to the country. The dairy sector accounts for around 15 percent of the total value of EU agricultural production. It’s share in the Czech Republic is much smaller. The number of dairy cows in the country has been on a steady fall since it reached just short of 600,000 in 1998. For the last three years till 2015 there has been a steady decline in Czech herds with the total last year down to 369,000.