Price of milk makes Greeks’ blood boil

by on November 22, 2012 5:01 pm BST

Thu Nov 22, 2012 12:01pm EST

* Farm-gate price of milk is one of highest in EU

* Retail price of dairy goods 30 percent over EU average

* Firms, government cite high costs; consumers see collusion

By Karolina Tagaris and Alan Wheatley

ORCHOMENOS, Greece, Nov 22 (Reuters) – To understand why
milk costs more in Greek shops than anywhere else in the
European Union, Stathis Aravanis’s farm is a good place to

Tall elm trees screen the 4 hectares (10 acres) of land that
Aravanis farms outside the small town of Orchomenos in central
Greece, not far from the ancient city of Thebes. The silence is
broken only by the sound of grazing cattle and a passing

Each day 200 or so cows produce 5.5 tonnes of milk that he
has been selling to Delta, a division of food conglomerate
Vivartia, since 1990. Delta, which collects the milk every two
days, pays him 45 euro cents a litre.

That is in line with the average farm-gate price in Greece
of 44.79 cents, according to Eurostat, the EU’s statistics
office. Only in Finland, Malta and Cyprus is the price higher.

Aravanis said his running costs made it impossible to
produce more cheaply.

His farm is too small for him to grow fodder for his total
herd of 440 animals, so he has to buy in clover, maize, oats,
hay and soya, which is imported from the United States.

“If the price fell to 40 cents none of us would be able to
survive. We are barely getting by at these prices,” he said.

Aravanis reserves his harshest criticism for government
bureaucrats, who he says make it hard for farmers to obtain land
permits to expand and reap economies of scale. “It’s not as if
cows are going to be grazing in their living room,” he said.

George Kefalas, who produces milk on a family farm near the
northern city of Thessaloniki, said it can take two or three
years to get an operating licence.

“In other countries, even in the developing world, these are
issues that were resolved decades ago,” Kefalas, the head of
Greece’s Cattle Breeders’ Association, said. He says he supplies
milk to the dairy firm Olympus at 46 cents a litre.


At the other end of the dairy chain stand Greek shoppers,
who wonder why they have to pay around 1.50 euros for a litre of
fresh milk.

Agnes Papadopoulou, 46, a mother of two young children who
lost her job as an accountant in January, stopped buying fresh
milk months ago because she could no longer afford it.

“It’s too expensive. It’s impossible to get by when you need
two litres a day, plus bread, plus food, never mind all the
bills and taxes we have to pay. Fresh milk is a luxury,”
Papadopoulou said, pushing a trolley stacked with pasta, lentils
and tinned food in an Athens supermarket.

Attempting direct comparisons with prices elsewhere in
Europe is treacherous because so many variables are in play,
such as transport costs, rents and consumer preferences.

But Eurostat says the price in Greece of dairy produce
-milk, cheese and eggs – was 31.5 percent above the EU average
in 2011, the highest in Europe.

Greek dairy firms say they charge a fair price and their
sector is one of the least profitable due to high costs.

But many Greeks assume that milk prices are rigged, a
suspicion reinforced by a fine of 75 million euros that the
Competition Commission slapped on several firms in 2007 for
fixing prices between themselves and with supermarkets.

The companies are still challenging the ruling in court.

“Of course milk needs to be cheaper. The government needs to
do something because the big companies are taking advantage of
us,” said Loukia Antonopoulou, 41, a saleswoman in a clothes
shop in Athens.


Athanasios Skordas, the deputy minister for economic
development and competitiveness, said the very fact that the
price of a litre of milk ranges from 0.85 to 2.10 euros shows
there is no indication of price fixing.

“Competition works. There is a large number of active firms
and the price range is very wide,” he told Reuters. “I’m not
saying milk is cheap, but I think the price is very fair.”

Skordas said milk was expensive because of farmers’ high
production costs, expensive packaging and the cost of
transporting milk to remote islands and villages.

Moreover, fresh milk is sold in Greece with a shelf life of
just five days, which means more trips to collect it from farms.

Dairy farmers oppose a long-standing proposal to extend the
shelf life of milk to 10 days, as is common elsewhere in Europe.

This could be done relatively simply in the pasteurisation
process, but Skordas said cattle breeders feared –
unnecessarily, in his opinion – that this would open the door to
increased competition from imported milk.

Back on his muddy farm at Orchomenos, Aravanis said the
quality of Greek milk was unbeatable. But he added: “It could be
sold a little cheaper. I wish prices could be held down so the
consumer with a family could buy even one more litre of milk.
That would be very important for us.”