Massive subsidies in the EU’s Common Agricultural Policy are putting local farmers in poor countries out of business, reveals a new report by ActionAid. Milking the poor shows how subsidised EU milk is causing unfair competition to poor farmers in Bangladesh, suppressing investment in the dairy industry and undermining EU investments in food security.
The report reveals that a massive €5 billion is given per year to dairy farmers in the EU with the lack of export limits allowing farmers to raise production and sell their milk products outside of Europe at below cost prices. Milk exports made competitive by EU subsidies are damaging local markets in developing countries and threatening the livelihoods of millions of people employed in the dairy industry in Bangladesh.
“The situation is absurd. We’re paying our farmers huge subsidies and they’re selling their products in poor countries at artificially low prices".
"The CAP needs serious reform so that it doesn’t push poor farmers further intopoverty”, said Trine Pertou Mach, Chair of ActionAid Denmark.
The report also reveals how European dairy giant Arla Foods – producer of Lurpak butter and DANO milk powder – is profiting from EU-subsidised milk powder sales to Bangladesh. The company is only able to produce the milk powder at a profit because of the EU subsidies.
Arla Foods has already been able to claim nearly €1 billion in CAP subsidies since 2000, giving it a huge advantage over local producers.
“What is good for Europe mustn’t be bad for the rest of the world”, said Pertou Mach.
EU member states must make sure that their subsidised exports don’t provide unfair competition to local production in poor countries.
In 2010 alone, the EU exported 378,000 tonnes of skimmed milk powder to developing countries, mainly in Africa and the Middle East – with a further 11% increase projected for 2011.
Plans to reform the CAP being developed by the European Commission must tackle the full impacts of the policy rather than agreeing how the cash should be carved up for the next 7 years.
ActionAid is calling on EU member states to ensure that the subsidies and trade barriers used to support European farmers do not undermine local agriculture and food security in poor countries.
 In 2005 the EU decided to ‘decouple’ subsidies from production levels leaving farmers free of production restrictions.