The European Commission has put it to the member states in a draft regulation that the initiative already taken in 2018 of setting a ceiling of zero tonnes for the buying-in at a fixed price under public intervention on skimmed milk powder be continued in 2019.
At the start of 2018, the member states gave the green light to this provisions, which came into effect on 1 March, in order to prevent the already considerable stocks of skimmed milk powder built up during the 2016 crisis swelling further (see EUROPE 11918), with the Commission having the option, should the need arise, of market intervention through calls for tender.
The procedure for 2018 has avoided the unwarranted buying-in of 109,000 tonnes of skimmed milk powder, adding to existing stocks, the Commission argues in its draft regulation. It goes on to say that, as market conditions have changed little and the experience in 2018 has proved the validity of the approach, there are grounds for continuing the initiative. The fundamental parameters of the milk and dairy market are unlikely to change substantially in 2019 with regard to the difference between the prices of fats and those of milk protein, it adds.
The new regulation is likely to be adopted by the member states this autumn.
In 2018, skimmed milk powder prices on the EU market have consistently been lower than the public intervention level but butter prices are double the public intervention level and the prices paid to farmers make dairy production profitable.
Against this background, the Commission has managed to sell off some of its stocks (which currently stand at 277,000 tonnes). And the frequency of calls for tender will be double to further accelerate the sale of stocks (see EUROPE 12060).