Strasbourg, 07/07/2015 (Agence Europe) - The EU must help to guarantee a better balance in the supply chain and introduce improved tools for tackling market volatility and helping farmers find new outlets for their products. This is what the European Parliament requested on 7 July in Strasbourg by adopting an own initiative report (non-legislative) on the milk sector and milk products, drafted by James Nicholson (ECR, United Kingdom).
The EP urges the Commission to address, with further targeted market measures, the crisis currently affecting domestic dairy markets as a result of downward price pressure resulting from a lack of adequate crisis instruments, a dip in global demand, global price volatility and the Russian embargo, whilst recognising the first steps that have been taken thus far in addressing the impact of the Russian embargo.
The EP regrets that its request, which aimed, in the event of severe crises, to provide subsidies for farmers who voluntarily reduced their production, has been rejected by the Council. It also underlines the importance of reopening the debate on this crisis management tool.
MEPs underline that the abolition of quotas (since last March) risks “leading to an additional concentration of milk production to the advantage of the largest dairy farmers and to the detriment of the smallest farmers”.
Challenges and opportunities. The EP notes that the high degree of price volatility and recurring crises that are “incompatible with major investments in livestock and the establishment of new producers” are the main challenges facing the dairy sector. It is therefore urging the Commission to “consider” measures to mitigate the risks arising from increased exposure to the world market, to monitor more closely the correct functioning of the single market in milk and milk products and to set up an action plan in order to show how it intends to mitigate these risks.
Price volatility and the end of milk quotas. The EP asks the Commission to define an adequate legal framework to allow production to be organised through supply management in the dairy sector and present one or more regulatory tools “to prevent and effectively manage new crises in the dairy sector, notably by facilitating the organisation of dairy production in terms of supply management”.
Implementation of the Milk Package. The EP notes that the sector could further explore the potential offered by “longer-term integrated supply chain contracts, forwards contracts, fixed-margin contracts, and the opportunity to 'lock in' a milk price reflective of production costs for a set period of time”. It believes that the option to make use of new instruments in contractual relations should be available and that contract mediation tools must also be made available.
Strengthening the Milk Market Observatory. The EP welcomes the establishment of the Milk Market Observatory (MMO). It recommends the definition of a market index comprising trends in product quotations, milk prices and production costs. It recommends that the Commission take the necessary action to ensure that the MMO can produce accurate data in real time and communicate earlier and more frequent warnings, crisis anticipation and recommended actions when the market index falls below a certain level.
CAP. The EP defends the need to review the requirements for triggering the income stabilisation mechanism available within Rural Development, as it considers the demand for losses of 30% for accessing Community aid to be excessive.
Managing risk in the dairy sector. The EP stresses that the Commission introduce more efficient and realistic 'safety-net' measures and ensure that that the intervention prices (it believes these are too low), are better adapted to market changes. The EP is therefore calling on the Commission for an “immediate” adjustment to the intervention prices. Agriculture Commissioner, Phil Hogan, has already said that he opposes any increase in intervention prices, which he describes as “counter-productive”. (Lionel Changeur)