Berlin, June 18 - German milk prices are likely to remain low and more emergency aid is needed for dairy farmers, the president of the association of German farming cooperatives said on Thursday.
Manfred Nuessel said at the association's annual conference in Berlin that Germany's milk market remained in serious oversupply, partly because of European Union reforms and partly because of weaker demand.
"We currently have too much milk in the market which at the moment cannot be sold for a price which will permit long-term production," he said. "In past months prices have fallen to a level which threatens the existence of dairy farmers."
Prices have halved to around 20 euro cents a litre from 40 cents in early 2008 prompting German dairy farmers to stage a series of protests this year.
Prices plunged after larger volumes of milk were sold when the EU relaxed its restrictive milk production quotas, permitting increased output.
Farmers say they need around 30 cents to cover their costs and some dairy farmers have started to close0 their farms.
Nuessel said the EU reforms meant the state was no longer setting milk prices.
Falling demand, partly caused by the economic slowdown, had occurred at a time of output liberalisation and Germany's supermarkets were using milk oversupply to negotiate lower prices, he said.
In recent weeks German supermarkets negotiated substantial price cuts for drinking milk which meant prices were likely to continue to decline. Prices for butter, cheese and milk powder were also falling.
It was still unclear whether falling prices would generate more demand, Nuessel said.
He rejected criticism that dairies owned by the association's 2,994 member cooperatives have been paying very low prices to farmers for milk.
"Dairies cannot pay farmers more for milk than the dairies receive in the market themselves," he said.
German dairy farmers must in future concentrate more on meeting market demand for milk rather than simply fulfilling EU milk production quotas, he said.
Germany's government announced in April an emergency aid programme for dairy farmers including advance payouts of EU subsidies. But more assistance was needed to prevent farm closures, Nuessel said.