British dairy farmers are paying the price for sanctions imposed on Russia for its military aggression, the EU’S agricultural commissioner admitted yesterday.
Phil Hogan said Vladimir Putin’s retaliatory ban on imports of dairy products had led to a slump in demand that has caused a steep drop in what farmers are paid.
Farmers have warned they are at breaking point as farm gate prices for milk have fallen by as much as 25 per cent over the past year.
Ahead of an emergency meeting of European agriculture ministers next month to discuss how to ease the crisis, Mr Hogan said yesterday he ‘totally’ agreed that British farmers had suffered because of EU foreign policy.
Last August President Putin banned Russian imports of EU dairy products – along with beef, lamb, pork, vegetables and fish – in response to sanctions imposed with the U.S following the annexation of Crimea from Ukraine.
Although Britain sold relatively small quantities of food to Moscow, total UK dairy exports fell by £1.2billion last year as there was a excess of supply across the EU, which had previously provided more than 80 per cent of Russia’s dairy imports.
Speaking in Brussels Mr Hogan said: ‘The only sector taking the hit arising from the foreign policy and decision by Russia has been agriculture.
‘The fact that President Putin has decided to extend those measures for a further year has accentuated the problem enormously.
‘Over the last year we were able to cope reasonably well… and now for the second year we are anticipating that this particular problem will spread to other particular member states and the UK farmers are feeling the effects of that.’
Mr Hogan said it was a ‘very difficult situation’ because ‘Russia were the recipient of 10 per cent of the world’s dairy products’, and ‘Europe was their first port of call’.
But he said EU farmers produced 4.5 per cent more milk in 2014 and had therefore ‘probably contributed to the particular glut that we have in milk worldwide at the moment’.
He added: ‘I am not blaming anybody in the sector for the way things are. The farming population in the European Union did not cause the foreign policy and security issue in relation to the Russian ban on agricultural products arising from sanctions adopted by the EU.
‘There’s a Ukraine crisis, there’s a Greek crisis, there’s a problem in the Chinese market as well at the moment so there’s an over supply in the global market place relating to dairy products in particular.
‘So you cannot expect dairy farmers in the European Union should have been able to anticipate all of those issues.’
The European Commission has taken measure including buying surplus butter and powdered milk from producers and storing it until it can be sold under better market conditions.
But Mr Hogan said the main focus needed to be finding new markets for products.
He said: ‘We need to get away from the issues of butter mountains and wine lakes that we were devilled with in the past and were a high cost to be borne by European taxpayers.
‘We are moving on to see if we can get the maximum amount of market opportunities for high quality European production.’
He said the ‘medium and long term prospects for the milk and dairy sector’ were ‘quite good’.
‘We have a growing middle class population in the Far East that is going to be the major source of our market opportunities,’ he added.
‘We have 150million people going into the middle income bracket each year for the next 30-40 years and that’s our opportunity as a competitive EU agricultural sector to exploit that potential for our food sector.’
Mr Hogan said Environment Secretary Liz Truss had yesterday raised the concerns of British farmers with him in a telephone call ahead of the emergency summit to be held on 7 September.
Farm gate milk prices in the UK fell 25 per cent to 23.7 pence per litre in the year to June – their lowest since May 2010, when they were strained amid the economic downturn.
British dairy farmers have staged protests over the past weeks releasing cows in supermarkets and pulling milk off the shelves as they accuse shops of taking advantage of the fall in demand by cutting what they pay.
Farmers in France and Belgium have also held demonstrations, blocking border crossings and roads, as well as supermarket entrances.