The European Commission has submitted its proposal for a regulation to the Council of the EU seeking to set the limit at which public intervention takes place on its skimmed milk powder at zero, compared with 109,000 tonnes currently (see EUROPE 11892).
This is to bring an end to automatic intervention in order to prevent milk powder stocks, which are already very large (currently standing at 385,000 tonnes) from the increasing further after 1 March when the intervention period opens.
“Raw milk prices paid to farmers are likely to stay in 2018 at a level which renders dairy farming remunerative because of the current strong demand for butter and cheese despite the relatively low prices commanded by dairy protein”, the European Commission says in its draft regulation. It proposes, therefore, that, “in order to avoid skimmed milk powder being bought-in at fixed price in a situation where this would not be in keeping with the objectives of the safety net, all public intervention for skimmed milk powder should be operated under a tendering procedure”.
The text will be discussed by the member state experts on the Special Committee on Agriculture on Monday 4 December. If they raise no objections, it will probably be adopted by written procedure. A number of member states have, however, already expressed their reservations, easing the view that this is a further weakening of the safety net barely 18 months after the last crisis.
According to the conclusions of the European Milk Market Observatory which met in Brussels on 28 November, “growing global milk production is causing some bearish market sentiment. Demand remains strong but is being outpaced by supply. A correction is therefore needed to address current imbalance and avoid stock build-up”.
EU milk deliveries increased by 440 000 tonnes in September 2017 while cumulated collection increased by a mere 0.4% between January and September. Recent growth has been particularly notable in Germany, France and Ireland. Average EU farm gate milk prices rose to 36.7 c/kg in September, 11% higher than the last five years’ average, and the best price for the month of September since 2013. (Original version in French)