Free trade pacts bad for business: Colombian milk association

Colombia’s dairy sector needs government assistance to be able to compete with European farmers, said the president of the national milk producers’ association Friday.

Jorge Hernan Uribe, president of milk producer’s association Analac, told Colombia Reports there are three “bottle necks” in the dairy sector that need to be resolved with reduction of production costs being the most important.

Uribe said that a decrease in production costs is necessary to be able to deliver milk products at a competitive price. He elaborated that the “European Union is the biggest producer of milk in the world and the biggest cause of distortion of international trade owing to the financial support that is given to local dairy farmers.”

According to a September 2011 report by ActionAid in 2009, EU farmers received $6.92 billion in subsidies. In contrast, Uribe said, “In Colombia we do not have state support that the Europeans have. This puts us in an unfavorable position to compete with them” when a free trade agreement between Europe and Colombia goes into force.

Other “structural problems” that need addressing, in Uribe’s view, are transport infrastructure and the elimination of bovine diseases.

“[Transport] infrastructure is a matter for the entire agricultural sector and the country in general, which would help us be able to reach some places, some points of export or sale at a lower price and deliver a product of better quality.”

He added that the free trade agreements accelerate the need for these problems to be resolved.

Although he said that the free trade pact with the EU represents more of a threat to Colombia’s milk producers than the recently ratified accord with the United States, the latter still poses a challenge as it could lead to easier access of US whey-milk to the Colombian market.

Whey, a by-product of cheese, is being mixed with water and mis-sold to Colombian consumers as cheap milk, although it has a poorer nutrient content. Colombia’s industry and trade regulatory body investigated 23 companies for this practice earlier in the year.

Uribe said, “We’re concerned about the free trade agreements specifically the one with the United States, because whey-milk products could arrive; there is no quota, there is no maximum volume which can be imported and these enter at a very low price. We worry about the displacement of the national milk market for [reasons of] price competition.”

When asked about the opportunities that the free trade pacts with the European Union and the United States could provide for Colombian milk producers, Uribe was pessimistic. “There are no advantages in the short term.”

Colombia’s pending free trade agreement with the European Union, which will put Colombian dairy farmers in direct competition with milk producers from the E.U. was approved by the European Commission in September and is being passed to the European Council and Parliament for final ratification.

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