Brussels, 16/12/2014 (Agence Europe) - The Agriculture Council held its umpteenth debate on Monday 15 December on the future of the milk and dairy product sector and showed division on the measures to be taken to lessen the impact of the ending of milk quotas in April 2015. Several countries, including Poland, called for flexibility in payment of the super-levy to avoid too heavily burdening farmers.
The Italian Presidency of the Council of the EU structured the debate around three topics: - action to be taken to mitigate price volatility; - the role of the European Milk Market Observatory; - action to be taken to help farmers deal with the consequences of the end of milk quotas in April of next year.
Before the Council, French minister Stephane Le Foll sent a working paper to a number of countries (Germany, Italy, Poland and Spain) to re-ignite the debate on what happens after the quotas are ended. According to sources, Italy backs the French approach. France is proposing improvements to the European observatory in order better to anticipate market fluctuations, monitoring of global markets, joint monitoring of the dairy and beef meat sectors which are linked (the beef meat market has been affected by the decapitalisation of the dairy herd by some producers in anticipation of crisis).
In the face of calls from several countries, France said it would agree to flexibility on payment of the super-levy (fine in the event of exceeding milk quotas), on condition that post-milk quota measures are put in place, for example to anticipate crises. The working paper sets out these measures: make provision for “early warning and crisis prevention mechanisms” in order to place responsibility on operators, define differing levels of crisis based on criteria and the indicators contained in the European observatory, and provide for instruments to support farms, farming systems and areas of production which, although economically viable and successfully managing production, find themselves under threat as a result of serious market disruption. In addition, the end of milk quotas must also, France argues, result in discussion on maintenance of milk production in certain areas that are disadvantaged at European level, within a context of increased competition.
Too late for the fat correction coefficient. At the Agriculture Council, Germany said it would have been timely to amend the fat correction coefficient (which is equivalent to increasing quotas), but ultimately it was something that was not done. Germany does not believe that the milk sector is in crisis. Austria regretted not having been heeded on amendment of the fat content. The United Kingdom opposed any change to content levels.
Less painful super-levy. Poland, supported by Italy and Romania, asked that the super-levy could be paid in several tranches (over five years) at a zero interest rate. Ireland spoke of spreading payment of the super-levy. The Netherlands was critical of the super-levy. Spain argued for better definition of instruments in the event of crisis and showed willing on the idea of bringing in greater flexibility on super-levy payment.
Improving the European observatory. Finland takes the view that ending quotas will result in greater price volatility and said the European observatory is not sufficiently responsive. Belgium asked for the observatory to take account of margins (Spain made the same point) and felt that current instruments were sufficient and that there is a need for income stabilisation mechanisms (in the event of a crisis). The Netherlands and the United Kingdom said that the observatory should produce transparent and objective data.
Are current tools good enough? For Denmark, present safety nets are not sufficient and there must be no return to a quota system. Sweden said that export aid was inefficient and that the current framework was sufficient. Belgium took the view that current tools were not good enough and that, in the event of crisis, income stabilisation mechanisms were needed. Austria was unhappy at not receiving an answer to its question on the legal basis after milk quotas expire.
No panic by Commission. Agriculture Commissioner Phil Hogan said, in substance, that it was too late to amend the fat correction coefficient, that the intervention price must not be increased and that the sector was not currently in a state of crisis (except where the impact of the Russian embargo is being felt most strongly). As regards the super-levy, he indicated that milk production rose by 7% in October, and that there has been an overall increase of 5% this year. He felt that farmers need to do more to reduce production. France pointed out that the milk sector crisis had cost €1 billion in 2009. (LC)