Brussels, 29/04/2016 (Agence Europe) - The European Commission is not ruling out the possibility of making extra funds available in June to encourage farmers to join the (voluntary) programme for the reduction of milk production, the institution announced on Monday 25 April.
The Commission remains pessimistic about the dairy sector in the coming months. It hopes that the voluntary supply management mechanism will have an impact. However, the absence of Community funding to encourage farmers to use this measure has come in for harsh criticism from the members of the committee on agriculture of the EP and the farming organisations.
Addressing the meeting of the committee on agriculture of the European Parliament on 25 April, the deputy Director General of DG Agriculture of the Commission, Joost Korte, referred to the voluntary milk production reduction mechanism, which has been in place since 13 April (and will run until 12 October 2016). Many MEPs express the view that the measure will not work as it lacks financial incentives. Korte replied that the institutions of the EU and the member states must “make sure the mechanism does work”. “The member states have considerable powers of persuasion and must make sure that farmers understand that one of the causes of the problems on the market is the fact that milk production is far too high”, the deputy Director General stressed.
Extra Community money?
Will there be money to make these powers of persuasion more effective? The European Commissioner Phil Hogan “has said that he will be revisiting this issue in June, because we will be able to see better then what margin we have in the 2016 budget. However, this margin will not be large. Mr Hogan has not ruled out a reflection on (Community) financial incentives on top of the incentives provided by the member states in the framework of State aid”, Korte said.
A proposal to this effect could therefore be forthcoming at the Agriculture Council to be held in Luxembourg on 27 and 28 June, once the Commission has a clearer view of its budgetary margin. However, it will be hard for the Commission to make further new money available given that so far, just €192 million out of the €420 million in direct aid made available in 2015 to ride out the crisis has been distributed by the member states to farmers.
Korte also raise the question of the agricultural crisis reserve. This will not be used this year, but this will have to be considered for next year if the market continues to deteriorate, he said. Many member states are opposed to this as the reserve is built up by reducing direct payments.
Prospects for milk not good. The last meeting, on 26 April, of the European Milk Market Observatory confirmed that the situation on the dairy market is very bleak. Farmers can expect considerable difficulties this autumn if the balance between supply and demand has not improved. In the first two months of 2016, EU milk collections rocketed by 7.4% over one year, with seven member states registering increases in double figures, including Ireland (+35.6%), Belgium (+20.6%), the Netherlands (+18.5%) and Poland (+10.3%). A considerable rise in Germany (+7.8%) was also registered.
Fruits and vegetables. The envelope for the new support programme for the fruit and vegetables sector to mitigate the effects of the Russian embargo, to be presented by the European Commission in the coming weeks, will be “greatly reduced”, Korte warned. However, new products are to be added to it, he stressed in answer to questions from the members of the agriculture committee of the EP. This new programme (presented in the form of a delegated act) will extend by one year (until the end of June 2017) the current instrument, which is due to expire in June 2016. However, the Commission pointed out, in the nearly two years since exports to Russia were first blocked, operators have adapted and found new markets. Indeed, just 35% of the programme due to expire in June has been used. Since autumn 2014, the European Commission has already spent a total of €262 million on withdrawing a million tonnes of fruit and vegetables from the market. (Original version in French by Lionel Changeur)