VanDrie Group asks support of EU Agricultural Commisioner in dealing with problems in calf sector

More photo's of the visit

During a visit from the European Agricultural Commissioner, Mariann Fischer Boel, accompanied by the Dutch Minister of Agriculture, Nature and Food Quality, Gerda Verburg, to the integrated veal producer VanDrie Group, VanDrie Group board member Henny Swinkels urged the need for support of the veal sector from Brussels. Sharply rising costs in veal production have placed extreme pressure on profitability in the sector throughout Europe. A partial cause is the current policy in Brussels. “National and European authorities have a responsibility to help find solutions to these structural problems,” claims Swinkels. The VanDrie Group is calling for more open import of raw materials for calf milk, increasing the current milk quota, efforts to expand potential sales markets for veal outside of the EU, relaxing existing labeling regulations for veal, but especially the linking of a slaughter premium for calves as long as the milk quota system remains in place.

Sharp rises in production costs

With the Dutch agricultural minister Gerda Verburg in attendance, EU agricultural commissioner Fischer Boel visited the integrated veal producer VanDrie Group. At a veal farm in Kamerik, Henny Swinkels, Director of Corporate Affairs for the VanDrie Group, requested attention for the difficult situation the sector is currently experiencing all over Europe. Several developments have led to skyrocketing production costs for veal. These price pressures have caused the sector to post negative profit margins for some time. The new cost-price situation appears to be a structural issue. Feed costs have risen sharply due to regulations within the context of European dairy policy. Prior support for milk powder processing has disappeared, and raw material prices have soared, partly because of limited production due to the milk quota. Purchasing these raw materials on the global market is not possible because of EU import levies.

In addition, the milk quota has also hampered the supply of newborn calves in the EU. The result is higher prices and increased cost price. European BSE regulations and labelling requirements for beef and veal have also contributed to extra costs for veal production.

Measures

All of these causes are direct or indirect consequences of European policy. Swinkels appealed to Commissioner Fischer Boel and Minister Verburg, as part of their responsibility for this European policy, to assist wherever possible in lowering production costs and raising the profit from sales.

More concretely, the VanDrie Group called for import tariffs on certain raw materials for calf milk to be temporarily suspended. “By doing that, the sector will not be forced to trade with European dairy producers, but could rather benefit from the lower prices on the world market,” explains Swinkels. A preferable outcome would be an increase in the European dairy quota as quickly as possble with a minimum of 2% a year. This would lead to a greater supply of both raw materials and newborn calves, and would thereby lower the price pressures on both.

To create better potential markets, the sector must have access to as many possible strong capital markets outside of the EU. Although from an international veterinary standpoint, all trade partners have acknowledged that deboned veal should be able to be traded without restrictions, this is not still not accepted in many countries. The VanDrie Group is therefore calling on the European Commission to ensure that countries including the US, Japan, Saudi Arabia and China comply with these international agreements as soon as possible. According to Swinkels, there are extremely interesting potential markets in these countries and others.

To reduce logistical costs for the required country-of-origin labelling, Swinkels proposed to Commissioner Fischer Boel that it also be possible to designate the place of birth as "EU" instead of the country of origin. Swinkels stressed that this would in no way compromise the ability to trace origins, since this process is already protected and ensured under other regulations.

Finally, progress on the issue of a calf slaughter premium was discussed with the European Agricultural Commissioner. PVE chairman Jos Ramekers argued on behalf of the entire Dutch sector that this premium should remain linked. In particular, the changed cost price situation has caused the premium to be especially important in overall profitability of veal production. Thanks to the premium, a portion of the increased cost price may be recouped. If the premium were dissociated from production, then in the current economic situation, a large number of veal producers would leave the sector. This would also result in a large sum of premium funds disappearing from the sector as well. “The veal sector really needs this money, for innovations to help solve the current problems on a structural level,” says Ramekers. Ramekers and Swinkels urged Fischer Boel to retain the linked premium until the milk quota is scrapped.