Brussels, 29/03/2016 (Agence Europe) - More robust measures included in the “milk package” that entered into force in 2012 could provide a more long-term response to the crisis currently affecting the livestock sector. The milk package entered into force in 2012 in preparation for the end to production quotas but its implementation varied according to the different EU member states. According to a preliminary analysis carried out by EU agricultural cooperatives and organisations (Copa-Cogeca) among their members, Denmark and the Netherlands, in particular, have thought it unnecessary to recognise the producer organisations (PO) that are supposed to strengthen the negotiating powers of livestock farmers in this sector. Nonetheless, within these countries, organisation into cooperatives is important. The member states that recognise producer organisations have all defined criteria focusing on the number of livestock farmers and minimum and maximum volumes that these organisations can cover. According to the European Commission, producer organisations account for 12% of European production.
Elsewhere, contracts between producers and processors have been made compulsory by a number of member states (Hungary, France, Italy, Portugal, Spain, Lithuania, Slovakia and Slovenia), whereas other countries are happy to see a voluntary mechanism applied. It is difficult in this context to implement the voluntary regulation proposed by the Commission to tackle the crisis (see EUROPE 11518).
The European Commission has moved forward on the publication of a report on the application of this package for June instead of 2018, as initially planned. On the basis of this work, discussions could cover ways of improving certain provisions, particularly to promote the setting up of major producer organisations, for example, by introducing compulsory subscriptions and incentives for concluding joint production agreements.
In a letter addressed to the Agricultural Economy Research Institute in Wageningen (Netherlands), which is currently carrying out an assessment of the milk package on behalf of the Commission, Copa-Cogeca is calling for new tools, like instruments to cover risks, fixed-price contracts, long-term markets and a guarantee for all conditions required for production and processing in the areas subject to natural constraints where cooperatives are the only organisations collecting milk and are confronted with high transport costs.
Even in the context of a PO, “milk producers still have to confront strong private processing companies that are on a bigger scale and therefore have greater negotiating powers” Copa-Cogeca warns. “This restricts any real increase in negotiating powers among producers, as well as the impact in terms of prices.” Copa-Cogeca also states that there is a potential for strengthening milk cooperatives at an EU level. Their activities account for 58% of the market but this model is lagging behind in around a third of all member states. The letter also points out that in return for improvements, “contracts could be used as a basis for a mechanism covering risk in the milk sector”. Copa-Cogeca also says that “in addition to improving the position of farmers on the market, it is necessary to cover other risks experienced by producers.” It suggests that new financial instruments be developed to tackle market volatility and provide export credit insurance with the help of the European Investment Bank. This work has already begun as part of the measures to tackle the crisis in the livestock sector.
Anti-crisis measures. Regulations for application of Article 222 of the Common Market Organisation (CMO) on voluntary management agreements for supply and extension to the cooperatives could be adopted and enter into force in the middle of April. The Commission is also hoping to submit an impact assessment of this arrangement after Easter. In theory, this could cover 85% of milk production, 12% of it has been assured by producer organisations and the rest by other forms of cooperation.
Doubling the price intervention ceilings set at 218,000 tonnes (t ) for skimmed milk powder and 100,000 t for butter will be proposed at the Council in the middle of April. The current limit for milk powder is 109,000 t, which will soon be attained. Public purchases will then need to be made by way of adjudications. During the most recent Special Committee on Agriculture (SCA), several member states asked for a swift decision to be made. They would like the Commission to avoid calls for tender to be made, which tend to put pressure on prices. The Commission believes that the four private milk storage systems in place in the milk sector - two of them for skimmed milk powder, one for butter and one for cheese - are sufficiently flexible for operators. This is even more the case if they are combined with the possibility of selling certain public intervention quantities. It is this summer that the meeting on the milk sector will take place that is planned between the agricultural markets task force (created by the Commission) and member state representatives. (Original version in French by Lionel Changeur)