The Great Milk Robbery

The following is a summary of a report by Grain (grain.org), a small international non-profit organization that works to support small farmers and social movements in their struggles for community-controlled and biodiversity-based food systems. They are based in Barcelona, Spain. The full title of the report is The Great Milk Robbery: How corporations are stealing livelihoods and a vital source of nutrition from the poor.

“A battle over dairy is underway that will profoundly shape the direction of the global food system and people’s lives. In most of the world, dairy is in the hands of poor people. Most dairy markets that serve the poor are supplied by small-scale vendors who collect milk from farmers who own just a few dairy animals. But such systems of ‘people’s milk’ are threatened by the ambitions of big dairy companies, such as Nestlé, and a growing number of other wealthy players that want to take over the entire dairy chain in the South, from the farms to the markets.”

So begins this fascinating report on people’s milk. In a large part of the world, from Colombia to Pakistan to Thailand, milk vendors stream into the cities in the early morning hours, delivering cans of fresh milk from small farms to household doorsteps. The milk is transported on bicycles, on carts, in cars and small vans. This system is under threat by large corporations who want to flood these markets with cheap powdered milk, particularly from the European Union, where dairy production is heavily subsidized.

The contributions of people’s milk to the lives of the poor around the world are many. It is a key source of nutrition; it is a subsistence food for those with dairy animals and affordable to those without. Fresh people’s milk tends to be much cheaper than the processed packaged milk sold by companies. Most importantly, for small farmers, people’s milk offers one of the few sources of regular, consistent income. It is also a source of revenue for the small-scale vendors, as well as for processors who turn the milk into cheese, yogurt and other dairy products on a daily basis.

As can be expected, this “informal sector” is treated with disdain by the elites, who call it “unhygienic” or “of poor quality.” Bankers and large-scale processors call the system “inefficient.” The truth is that this “unorganized sector” has been successful in getting large quantities of healthful dairy products to market as long as they are not undercut by dumped surplus milk from elsewhere or persecuted by unfair regulations.

Transporting fresh milk in Kenya.

Unfortunately, the movement for people’s milk runs head first into the ambitions of corporations that seek to control the global dairy industry. With dairy markets in the northern hemisphere already saturated—even declining—Big Dairy is targeting for its growth the very markets served by people’s milk.As these dairy corporations invade the developing world, they are flanked by a number of other companies and wealthy elites who, together, are trying to reorganize the entire supply chain, from farms to markets.

Corporate hopes for emerging markets rest in large part upon projections for a growing middle class in the South, one that will consume more dairy and will purchase that dairy from supermarkets. It is impossible for the people’s milk system to comply with the private standards and procurement policies set by these companies.

Among both the middle class and the poor, the big push by the dairy industry is for powdered milk products. For example, Nestlé wants to convince poor children in the cities of Pakistan to drink their NIDO powdered milk product instead of fresh whole milk. When the company found that only 4 percent of the twenty-one million children in urban Pakistan were consuming NIDO powdered milk products, mostly in higher income families, the company began “fortifying” their product with iron and advertising heavily to convince poor Pakistani mothers that NIDO was a better choice for their children’s health. Sales increased fivefold in 2009, when the campaign was launched.

The most common products are made with cheap imported skimmed milk, which is reconstituted with cheap vegetable oil. Developing countries account for nearly all imports of skimmed milk powder. New Zealand’s large dairy cooperative Fonterra, for example, regularly blends its powdered milk with vegetable oil in its products for poor consumers.

The big companies spend large amounts to create demand for their processed products. For example, in the poor northeast of Brazil, Nestlé and Danone have hired PR firms to help them build strategies to attract poor consumers. Nestlé has a program where salespeople go from door to door selling packs of cookies, dairy products, yogurt and desserts. These vendors “are trained to act as nutrition consultants, helping consumers understand healthful eating.”

The large companies have no interest in purchasing from small farmers, but instead have launched a program to build  mega-dairies throughout the developing world. And much of that milk is then turned into powder, so it can be stored easily. Skimmed and whole milk powder is the primary form through which milk is traded globally, as fresh milk is too perishable for international trade.

A basic problem is that international prices for dairy are far below the costs of production for nearly all countries. The price is artificial, based on heavily subsidized surplus production in Europe and the U.S., and a low-cost model of export production in New Zealand and Australia, which farmers in many other countries cannot compete with.

In Vietnam, for example, where the dairy market is dominated by a few large processors, and powdered milk products make up 80 percent of the national market, the processors set their local procurement prices according to international powdered milk prices. These prices are at or below the costs of production for the average Vietnamese farmer.

For years, developing countries have supported the people’s milk with systems of tariffs to protect small farmers. But the potential for these countries to maintain or implement tariffs or other trade protections on dairy are under threat from the multitude of bilateral and regional trade agreements being implemented and negotiated around the world. In negotiations for such trade deals, the EU, Australia New Zealand, the U.S., Argentina and other exporters insist that importing countries open their markets to their dairy products and comply with other demands that protect exporters’ interests.

Government officials tend to have little sympathy for the people’s milk. Colombian Agriculture Minister Andres Fernandez admits that the new trade agreement his government has initiated with the EU would adversely affect more than four hundred thousand farming families across Colombia. But he says that it should be viewed as a sacrifice, since other industries such as tobacco and coffee stand to gain. “The dairy industry itself is exposed, we cannot lie to the country, but we can’t stop signing trade agreements with other countries just because one sector is severely affected,” he said.

Many wealthy families are getting into the dairy business. For example, the Ancali dairy farm is owned by Carlos Heller, heir to the Falabella family fortune, one of Chile’s wealthiest dynasties, with major holdings in retail, real estate and transportation. The farm has sixty-five hundred cows and produces almost eight million liters of milk per month. Large corporations like Nestlé are purchasing dairy farms in many developing countries, consolidating and creating impossible competition for the people’s milk. Workers on these farms do not receive the kind of income that goes to producers of people’s milk.

Fortunately, the influx of industrial milk has met popular resistance. In Colombia in 2006, a government decree prohibiting the consumption, sale and transport of unpasteurized milk triggered huge protests across the country, forcing the government to postpone adoption of the regulation. Popular opposition did not die down and two years later, with over fifteen thousand people marching in the streets of Bogota, the government was yet again forced to push things back another two years. The people also mobilized to protest trade agreements that would have left the people’s milk sector vulnerable to imports of cheap powdered milk. Finally, in 2011, Decree 1880 was passed, which recognizes leche popular as both legal and essential. The battles are not over, but the dairy sector is now at the heart of the popular resistance to these deals.

Dairy is the cornerstone in the construction of food sovereignty—whether in the U.S., Pakistan, Colombia or Thailand. It touches so many people. About 14 percent of the world’s population depend directly on dairy production for their livelihoods. The strong alliance between vendors, consumers and farmers of Colombia is an inspiration. Similar alliances now need to be forged everywhere. Milk must remain in the hands of the people.

For the full report, see http://www.grain.org/article/entries/4259-the-great-milk-robberyhow-corporations-are-stealing-livelihoods-anda-vital-source-of-nutrition-from-the-poor.

The People’s Milk in Developing Nations

* Figure is for cheese only.

Industrial Milk: Stacks of powdered milk in bags, stored in a warehouse.
The powder is reconstituted with vegetable oil to make dairy beverages.

People’s Milk: Woman selling milk and millet mixture in Zinder, Niger.

This article was published in the Fall 2013 issue of Wise Traditions, the quarterly journal of the Weston A. Price Foundation.