Milk inflation makes Germany gulp

1st August 2007, Comments 0 comments

1 August 2007, Berlin (dpa) - German consumers, long accustomed to buying cheap food, are up in arms over an explosion in the price of milk and dairy products on supermarket shelves. Triggered in part by a growing demand from Asia, milk has gone up by more than 10 per cent in the past week, while butter has risen a whopping 50 per cent and cheese is expected to increase 10 per cent. German Consumer Affairs Minister Horst Seehofer called the price rises unjustified and said they placed "an undue burden on t

1 August 2007

Berlin (dpa) - German consumers, long accustomed to buying cheap food, are up in arms over an explosion in the price of milk and dairy products on supermarket shelves.

Triggered in part by a growing demand from Asia, milk has gone up by more than 10 per cent in the past week, while butter has risen a whopping 50 per cent and cheese is expected to increase 10 per cent.

German Consumer Affairs Minister Horst Seehofer called the price rises unjustified and said they placed "an undue burden on the consumer."

Competition authorities have promised to look into the increases, while consumer organizations advised shoppers to compare prices carefully when making their purchases.

The target of the outrage was not so much the farmers whose cows produce the milk, but the dairy industry and supermarket operators who have been accused of taking advantage of an increased global demand.

This demand has come primarily from newly emerging economies like China and India, but also from Russia and other states in Eastern Europe, who are drinking more milk as their standard of living improves.

China's thirst for milk products has proved insatiable since Prime Minister Wen Jibao said in April 2006 that he would like to see every Chinese drink a half-litre of milk per day.

The Asian nation is already the world's largest market for dried milk. Some 500 million euros (680 million dollars) was spent on dried milk in 2005, most of it for imports. Experts expect the figure to reach 900 million euros this year.

China's 12 million cows produced 28.65 million tons of milk in 2005, three times as much as 10 years earlier. The figure is expected to climb to 42 million tons in 2010.

In the meantime, China has been snapping up raw materials from abroad to build up its own dairy industry, including sees to produce foodstuffs for their livestock.

In addition to the increased demand from Asia, a drought that curbed production in Australia and other countries caused a shortage on the world market, triggering a knock-on effect in Germany.

German dairy farmers could produce more to meet the shortfall, but are prevented from doing so by EU regulations which impose stiff penalties on farms that exceed their milk quotas.

A German farmer earns an average of 27.35 cents per litre of milk, which costs anywhere from 62 cents to more than one euro in discount stores and supermarkets. This is still cheaper than what shoppers had to pay five years.

"Consumers pay no more for butter today than they did 20 years ago," says Gerd Sonnleitner, president of the German Farmers Association, in justifying the higher prices.

Dairy farmers have "gone through a lean period with wages close to the breadline," Sonnleitner said. The higher prices were "a matter of necessity," he added.

But once Germans have recovered from the shock of paying more for their dairy products, a new round of price rises for other food might be around the corner.

Bread could be the next to go up because more and more farmers are dedicating their maize crops to biofuels, which are seen as a remedy for reducing dependence on oil.

Chocolate is also likely to become more expensive because of the higher milk price, while cheese toppings for pizzas are likely to send the price of this popular dish spiralling upward.

DPA

Subject: German news

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