A report by anti-poverty charity ActionAid yesterday claimed that subsidies paid to European producers under the Common Agricultural Policy are putting poor farmers out of business around the world. The group blamed distorting subsidies, particularly in the dairy sector, for distorting trade and preventing poorer farmers from selling their milk in developing countries despite reforms in 2003 aimed at tackling the problem. image expired

‘Milking the Poor,' issued ahead of the World Dairy Forum meeting in Luxembourg this week and the upcoming European Commission proposals for post-2013 CAP reform next month, claims millions of dairy farmers in developing countries are forced out of business by exports made possible by European farm subsidies and concludes that this practice amounts to unfair competition.

The report alleges that, with the €5billion paid out to EU dairy farmers each year, some are able to raise production and sell their milk products outside of Europe at below cost prices, due to a lack of export limits. ActionAid said this practice is threatening the livelihoods of millions of people worldwide.

According to ActionAid’s figures the EU exported 378,000 tonnes of skimmed milk powder to developing countries in 2010, primarily in Africa and the Middle East, with a projected 11 per cent increase to that figure expected in 2011.

ActionAid levels blame at large processors, including dairy giant Arla Foods; Trine Pertou Mach, chair of ActionAId Denmark said, “The company is only able to produce the milk powder at a profit because of the EU subsidies. Arla Foods has already been able to claim nearly €1bn in CAP subsidies since 2000, giving it a huge advantage over local producers. What is good for Europe mustn't be bad for the rest of the world."

The charity is calling on member states to ensure that post 2013 subsidies “tackle the full impacts of the policy” rather than deciding how money will be allocated within Europe. Ms Pertout Mach reiterated, "EU member states must make sure that their subsidised exports don't provide unfair competition to local production in poor countries."