Assignment 3.

The Milk Price Council

The beginning of October characterized a lot of disruption in Brussels, almost thousand farmers blocked he roads in and around Brussels. Why? Because the milk price is too low. Farmers nowadays only get 0.20 cents for a liter of milk! Alarm! For most farmers it is unbelievable the way the European Union treats them, they have been abandoned! After all, the EU has never paid any attention to the agricultural sector (the 70% EU budget money each year not taken into account).

It is true, the milk price has never been so low before in the history of the EU. The farmers complain that this will lead to the bankruptcy of many agricultural companies, of course this is a disaster for a lot of families; money has to be earned and mouths have to be fed. But from a economical point of view it is not so strange at all. If we look at the capitalistic market which prescribes the automatic interaction between supply and demand it is more strange that numbers of agricultural companies still exist nowadays! All because of years of EU support.

The agricultural sector has always been a source of sorrow and conflict, started with the introduction of the intervention price, farmer-aid subsidies and external barriers; First problem (external): these intervention prices and subsidies for EU farmers lead to numbers of conflicts with the WTO who stands up for the right of other, poorer countries and strives for fair competition worldwide. Second problem (internal): the amount of money spend on agricultural policy dramatically increased in the past years, farmers can produce all they want, even if there is no demand for their milk. After all, they still get a minimum price for it!

There is a really good solution for these problems and finally also the EU has figured it out; no more intervention prices, subsidies and get rid of the external barriers. This leads to a higher external competition, fair chances and only the strongest EU farmers will survive. The market mechanism will start working again and the surpluses disappear, which is very conductive for the EU budget.

This is why the milk-council in Brussels which is finally on the right track shouldn’t be worried about the disruptions, it has to focus on the long-term economy and therefore it is necessary to be harsh for the EU farmers because in the long-term they will see this new policy also works in their advantage.