The Assembly,
Having considered the Report of its Committee on Agriculture on the production and marketing of milk and dairy products ;
Taking note of the valuable work of the Ministerial Committee on Agriculture and Food of O.E.E.C. and of the recent improvement in the market of dairy products ;
Considering nevertheless that, on account of long-term production trends, this improvement is likely to be of a temporary character,
Recommends that the Committee of Ministers of the Council of Europe and the Council of O.E.E.C. :
Dairy farming is one of the largest sectors of European agriculture.
In certain West European countries milk and dairy products accounted for roughly the following percentages of gross agricultural production in 1955 Note:
Austria - 22 %
Belgium - 24 %
Denmark - 27 %
France - 19 %
Federal Republic of Germany - 25 %
Ireland - 22 %
Italy - 12 %
Netherlands - 26 %
Norway - 40 %
Sweden - 40 %
Switzerland - 38 %
United Kingdom - 27 %
With only few exceptions, national dairy policies aim at improving farmers' incomes through direct and indirect protective measures. This has led to an increase in domestic supplies in post-war years proportionately greater than the increase in consumption. Thus, total cow milk production in OEEC countries combined attained a level of 90 million tons in 1957-58, representing an increase of 24 % over pre-war.
The butter production in the same period rose by about 20 % in OEEC countries combined (and in the EEC area by about 32 %). At the same time per capita butter consumption in the OEEC area as a whole, although slowly recovering after the war was on the average 13 % below pre-war in the years 1953-56 but reached a level of about 11 % above pre-war in 1957-58. It may be recalled t h a t the population of Western Europe since pre-war increased by 19 %.
In the first half of 1958 this development led to a crisis which considerably disorganised home markets and foreign trade alike. The crisis was precipitated since, in addition to slackening import demand in some of the traditional importing countries, in particular Germany and Italy, owing largely to increased domestic production, several other countries which hitherto had no surplus, or only small surpluses of butter to put on the market, suddenly were forced to export considerable quantities (Austria, Finland, France, Ireland, Norway and Sweden). The immediate causes which led to the exportable supplies in these countries were rising production and partly also decreasing consumption.
As a result prices declined sharply ; thus the international price level (London Provision Exchange) as on 1st May 1958, was only a little over half the 1954 average price and only about three-quarters of the 1957 average price, which in itself was relatively low.
A sign of how alarming the situation had become is that these prices were considered to be below costs of production in countries generally recognised as above average in productivity. In Great Britain, for instance, a pound of butter was sold to the consumer at 5d. below the price of production in New Zealand.
Commenting on the situation, the Chairman of the New Zealand Milk Board said "We can cope with fair competition, but we cannot compete with European countries which sell butter at a high price to their home market, and dump thousands of tons on the British Market below cost price." In consequence, New Zealand and Australia decided to launch a campaign in various European countries to encourage butter consumption.
During the first two months of 1958, Finland exported nearly three million kilos of butter to Great Britain. These exports brought in 500 million Finnish marks, but at the same time export subsidies amounted to 850 million Finnish marks.
In March 1958, the Irish Government stated that losses in 1956 on butter exports amounted to £1.14 million and were likely to reach £5.52 million in 1957.
A very important factor was Germany's decision not to import butter up to the month of June 1958, home production having reached a record level. Thus imports of butter in 1957-58 amounted to only 27,700 MT., as compared with. 45,000 MT in 1956-57.
In order to reduce stocks the Netherlands exported butter at prices below " minimum delivery prices " with the help of aids to exports.
The situation was especially critical in Denmark. In order to encourage home consumption, a vast publicity campaign was launched and the domestic price of butter reduced. A kilo of ordinary butter cost no more t h a n 300 francs at retail. In addition, frozen butter was put on the market at 240 francs per kilo. Stocks were estimated at 16,000 tons, a considerable amount in view of the consumption possibilities of the world market. However, Germany was obliged to accept from Denmark 12,000 tons of butter in 1958, in accordance with its commercial agreement with that country.
In Italy, a minimum price for butter of 650 lire per kilo was fixed on the Milan market from 1st May 1958 (before it was 750 lire) and imports were temporarily suspended.
Meanwhile, in Austria, milk surpluses were increasing. It was estimated that in 1958 milk production would increase by about 140,000 tons to reach a total of 2.75 million tons.
These signs pointed to the need of discouraging, to some extent at least, milk and butter production in high-cost countries, as the decline of demand in the international butter market was largely caused by the rapid development of subsidised production in those countries.
In April 1958 an International Conference of Milk Producers was held, attended by 10 countries : Australia, Denmark, Finland, France, Luxembourg, the Netherlands, New Zealand, Norway, Sweden and the United Kingdom.
The Conference first established the main causes of the crisis, which were :
The Conference then recommended a number of measures to improve market conditions ;
In order to remedy the situation several countries exporting dairy products took action.
In Holland, in order to help dispose of stocks of butter and cheese, the Government decided to reduce the so-called " delivery " prices of butter and of whole milk cheese (Gouda and Edam cheese). The guaranteed price of milk at production remained unchanged, but the Dutch Government attempted to stimulate home consumption of unsubsidised pasteurised milk with a higher fat content (standardised milk is subsidised).
In Denmark the Government decided to raise the fat content of household milk and whipped cream and, simultaneously, to reduce their prices.
In Sweden, the Agricultural Organisations proposed :
an increase in the price of margarine ;
a reduction on the price of butter ;
the sale of butter at reduced prices to institutions of a social character ;
a reduction in three years of about 200,000 in the herd of dairy cows.
It was decided to reduce the butter price for domestic sales by 2 Kr. per kilo, of which 3/4 were borne by the farmers and 1/4 by the Government. In addition, the Government subsidised sales to public institutions.
On the international governmental level, the butter crisis was first examined on 15th March 1958 and again on 17th and 18th April 1958 by the Committee of Deputies of the Ministerial Committee for Food and Agriculture of the O.E.E.C.
The Deputies, after noting that the present surplus, due to the mild winter and abundance of fodder, had resulted in the closure of most European markets, a fall in prices on the London market and an increase in exportable supplies, expressed the opinion that export subsidies tended to aggravate the situation.
In July 1958 the OEEC Council adopted the following Recommendation :
The Committee of Deputies considered, in view of the present situation and outlook of the dairy products market, that Governments should be urged to reconsider their longt e rm dairy farming policy, bearing in mind the need :
to avoid isolating production from real market conditions ;
to discourage costly production ;
to take into account market trends and the increased competition between butter and margarine.
At their meeting in September 1958, the Deputies found that the situation of the butter market was not so critical as in the spring. Thus, the price of Danish butter in London had risen by 30 % without however reaching the 1957 level. The market in cheese and other dairy products also improved. Butter consumption often increased with reduction in priceNote . Prospects were therefore better, but the situation remained serious and should be watched.
The Deputies then considered it necessary :
In November 1958 another Conference of European Milk Producers which met at Cremona advocated cutting down as much as possible costs of production, processing and marketing so that butter and other dairy products might be offered to consumers at reasonable prices.
At the same time, the Committee of Deputies of the Ministerial Committee for Food and Agriculture of the 0. E. E. C. again found that, though the butter market situation had eased, the likelihood of high milk production remained, and the possibility of a new crisis in dairy. products was by no means averted.
Indeed, milk production continues to increase, not because of bigger herds, but because of greater yields per cow. Further, owing to increases in fat content the quantity of standardised dairy milk and of butter which can be produced from a given quantity of raw milk tends to be greater.
If the present production trends are maintained, it is estimated that total milk production in 1965 will be 27 % more than in 1955. It is also estimated that consumption of dairy products, other than butter, will be 9 % above the 1955 level. If butter is to account for the difference, consumption of butter per head, therefore, must be increased by more than 20 % as compared with 1955.
These estimates will probably be affected by the fact that a certain number of countries take steps directly or indirectly to adjust milk production to actual demand.
Measures applied or contemplated include : reducing the number of cows, inter alia by campaigns against bovine tuberculosis, adjusting prices of dairy products, raising the fat content of dairy products and restricting the use of concentrated feeding stuffs.
The action taken by various Governments to limit the effects of the butter crisis has done much to restore the situation. The measures taken included :
Reduced retail prices on butter, particularly in some cases, cold store butter (to bring butter and margarine prices nearer).
Publicity campaigns for increased consumption of milk and dairy products (notably butter).
Culling of herds ; in a number of cases related to the fight against TB and other contagious bovine diseases.
Increased fat content of liquid milk and butter (and cheese).
Efforts to switch over from butter production to production of cheese and other dairy products.
Increased levies on feeding stuffs especially those imported.
Obligatory or recommended " taking back "of butter by farmers, in some cases at reduced prices.
Increased use of butter and milk in various social schemes.
Blending of butter with margarine in some cases.
In the first half of 1959, Germany and Norway as well, as Austria and Italy, were the only countries not t o show a decrease in butter production as compared with the first half of 1958.
In Denmark, stocks of butter have been exhausted, sales to Great Britain in the first quarter of 1959 were 12 % lower than a year before and prices have recovered.
In Great Britain, the butter market situation has improved; nevertheless import quotas vis-a-vis " marginal " countries had to be enforced for a time.
In Holland, as a result of a reduction in the price of butter and higher home consumption, stocks have been reduced and are now practically nil and the general improvement in the European market has even caused some firmness in prices which appears to be maintained.
Sweden switched over from being an exporter to now being an importer.
The Committee of Deputies of the Ministerial Committee for Food and Agriculture of the 0. E. E. C. has decided to keep the situation of the dairy produce market constantly under review. Moreover, if there is any risk of the international market deteriorating, the Committee will hold an emergency meeting.
The Deputies are also to lay down guiding principles for measures to be taken to remedy the imbalance between production and consumption. These long-term problems will be followed up in conjunction with other international organisations concerned.
| Pre-war | 1950/1951 | 1957/1958 | |||
|---|---|---|---|---|---|
| 1 000 T | 1 000 T | 1 000 T | in % of Pre-war | ||
| Austria | 2,393 | 2,179 | 2,756 | 115 | |
| BLEU | 3,229 | 3,415 | (3,963) | (123) | |
| Denmark | 5,270 | 5,395 | 5,265 | 100 | |
| France | 15,038 | 16,000 | 20,600 | 137 | |
| Germany F. R. | 15,000 | 14,610 | 17,770 | 118 | |
| Greece | 191 | 162 | 312 | 163 | |
| Iceland | 54 | 77 | 97 | 180 | |
| Ireland | 2,308 | 2,407 | 2,800 | 121 | |
| Italy | 5,907 | 6,803 | 9,002 | 152 | |
| Netherlands | 5,146 | 5,665 | 6,135 | 119 | |
| Norway | 1,532 | 1,662 | 1,751 | 115 | |
| PortugalNote | 109 | 161 | 206 | 189 | |
| Sweden | 4,596 | 4,833 | 3,416 | 74 | |
| Switzerland | 2,591 | 2,563 | 2,906 | 112 | |
| TurkeyNote | 1,220 | 1,382 | 1,300 | 106 | |
| United Kingdom | 8,324 | 10,137 | 12,002 | 144 | |
| Total O. E. E. C. Note | 72,908 | 77,451 | 90,009 | 124 | |
| EEC countries combined | 44,320 | 46,493 | 57,470 | 130 | |
| ( ) Preliminary figures. Source : OEEC statistics. | |||||
| Butter | Cheese | |
|---|---|---|
| Austria | 160 | 78 |
| BLEU | (139) | (155) |
| Denmark | 98 | 312 |
| France | 162 | 138 |
| Germany F. R. | 129 | (183) |
| Ireland | 83 | 115 |
| Italy | 116 | 128 |
| Netherlands | 91 | 145 |
| Norway | 57 | 161 |
| Sweden | 98 | 147 |
| Switzerland | 121 | 117 |
| U. K. | 102 | 256 |
| OEEC countries except Greece, Iceland Portugal and Turkey | (120) | (148) |
| EEC countries combined | (132) | (145) |
( ) Preliminary figures. Source : OEEC statistics.
| pre-war | 1950/1951 | 1957/1958 | ||
|---|---|---|---|---|
| kg. | kg. | kg. | in % of pre-war | |
| Austria | 186 | 166 | 168 | 90 |
| BLEU | 80 | 102 | (97) | (121) |
| Denmark | 167 | 170 | 164 | 98 |
| France | 86 | 92 | 91 | 106 |
| Germany F. R. | 139 | 121 | 115 | 83 |
| Ireland | 147 | 190 | 175 | 119 |
| Italy | 37 | 48 | 58 | 157 |
| Netherlands | 146 | 196 | 166 | 114 |
| Norway | 176 | 247 | 228 | 130 |
| Sweden | 250 | 237 | 195 | 78 |
| Switzerland | 244 | 241 | 205 | 84 |
| United Kingdom | 107 | 158 | 152 | 142 |
( ) Preliminary figures. Source : OEEC statistics.
| Butter (product weight) | Margarine | |||
|---|---|---|---|---|
| Pre-war | 1957/1958 | Pre-war | 1957/1958 | |
| kg. | kg. | kg. | kg. | |
| Austria | 3.7 | 4.6 | 1.5 | 4.0 |
| BLEU | 9.0Note | 10.8Note | 6.7 | 10.6 |
| Denmark | 8.7 | 12.8 | (20.8) | (19.9) |
| France | 5.3 | 8.0 | 0.8 | 2.1 |
| Germany F. R. | 8.1 | 7.4 | 6.1 | 12.1 |
| Ireland | 13.2 | 20.4 | 1.1 | 2.8 |
| Italy | 1.4 | 1.7 | ? | ? |
| Netherlands | 6.2 | 3.8 | 6.8 | 19.5 |
| Norway | 7.6 | 3.2 | 18.5 | 24.1 |
| Sweden | 10.7 | 7.6 | 9.7 | 16.5 |
| Switzerland | 6.8 | 6.5 | u. a | 2.1 |
| U. K. | 11.2 | 8.4 | 3.9 | 6.8 |
( ) Preliminary figures. Source : OEEC statistics.