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LISA MULLINS: I'm Lisa Mullins and this is The World. We heard a lot about rising food prices last year. Well, some prices are starting to come down in the dairy section of European supermarkets, and that's not good news for Europe's dairy farmers. They say they're being driven under by cheap imports and by middlemen who are paying them less this year. The World's Gerry Hadden reports that it's gotten so bad that a few Spanish farmers are trying to skirt the middlemen and sell directly to consumers.
GERRY HADDEN: Using this automatic milk vending machine is a little like milking a metal cow. You put your money in, then hold your bottle under an aluminum spout as the white liquid pumps out. This is Spain's first milk machine. It's just opened here in a town called Salt. Farmer Xavi Modina says consumers who buy from the machine know they're getting the real thing. ï¿½This milk,ï¿½ he says, ï¿½is pasteurized and brought straight here. Nothing's been added, nothing's been taken away. You buy it with all of the fats and proteins that came out of the cow.ï¿½ The milk machine is a big hit with shoppers like this woman, Merce. She says, "I think it's fresher and I know the farm that it comes from. Also, I bring my own bottle to save on packaging which I like." This milk machine is still just a novelty but it reflects a growing frustration on the part of farmers across Europe. The dairy crash has its origins in 2007 when milk prices around the world rose sharply. Lured by potential profits, farmers around the world invested heavily in more production. Many went into debt. By 2008, they'd produced a global glut just as the economic crisis was hitting. Prices plummeted. Now Europe's dairy farmers want greater protections to weather the storm. At the end of April, dairy farmers from Spain to Germany staged strikes to make their point. These farmers in Hannover have been demanding a minimum of about $2.50 per gallon from the creameries that act as middlemen. But with too much milk on the market these days farmers don't have much bargaining power. On a farm in the Spanish town of Vic, several dozen cows brush against their pens. The milk that farmer Josep Alsina produces here counts towards Spain's overall yearly quota. Across Europe such quotas were put in place to limit production and to keep prices stable. But they're said to expire in 2015. Alsina says losing those limits will kill the dairy industry. He says, ï¿½We need two things to ensure a long-term solution. First, the European Union should extend the quotas, but we also have to change how they work. For example, if a country produces more milk than it consumes, it should have a production limit so it can't export so much.ï¿½ But EU officials insist the quotas will disappear altogether in 2015. In the meantime, they say it makes more sense to pay European farmers to export their dairy products. That would reduce supply here and stabilize prices. But critics say that would just push the problem onto others even more vulnerable. In the developing world, for example, a flood of subsidized European dairy products could wipe out dairy farming there. For The World, I'm Gerry Hadden, Salt, Spain.