Brussels, 05/10/2001 (Agence Europe) - The Court of Auditors recently published its special report No 6/2001 in which it suggests that the European Commission make proposals with a view to liberalising milk production in the European Union according to the model in force in the arable crop sector. The Court recommends phasing out the current quota regime under the common market organisation (CMO) for milk and milk products. Furthermore, the Court considers that European consumers pay too much for milk, if one compares the Community price to the price on the world market. The Commission, for its part, considers that the Court's report does not provide sufficient elements to justify abolishing this system.
The Court insists on the fact that the current level of quotas is too high given that, out of an annual production of 120 million tonnes, 15 million tonnes have found an outlet on the world market helped by refunds, and 10 million tonnes have found opening on the internal market through subsidies. In order to reduce Community spending resulting from the sale of structural surpluses, the Commission is called on to present proposals, from 2002, with a view to "fundamental" reform of the dairy sector allowing the global level of milk production to be reduced and adjusted to the non-subsidised sales potential of the market. In the short term, the Court recommends that the Commission examine the possibility of allowing quotas to be transferred among producers operating in different Member States (in order to reduce quotas). The report also specifies that the problems of implementation of the system continue in Italy, Greece and Spain, concerning the receipt of additional payments in the event of quotas being exceeded. The Court believes it would be desirable to review the sanctions system imposed on buyers as quickly as possible in the event of infringement and to improve controls. The Court's audit comprises positive points: the quota regime is said to have made it possible to bring production down to acceptable levels (the surplus over and above national reference quantities being less than 1%), to lower budgetary costs and stabilise the milk sector. In addition, the Court noted growth in producer incomes.
The Commission refuses most of the criticism made by the Court on the cost of the system. It explains that the reform suggested by the Court would initially entail a 20% reduction in the level of quotas that should be offset by compensations paid to producers amounting to EUR 12.5 billion over several years. "A reduction in quotas will also, in the short term, cause greater imbalance on the meat market", given that, if the quota is reduced by 20%, "an equivalent percentage of dairy cattle would have to be slaughtered", added the Commission. It points out that fundamental reform of the CMO for milk will not resolve budgetary problems as the price reduction up to the world level "must be offset by direct aid". The Commission is not of the opinion that liberalisation of the milk market would entail lower costs for European consumers. "Envisaging the transfer of quotas between Member States could bring the foundation of the quota regulation into question", writes the Commission on the grounds that payment of the levy is made at national level. We recall that, during negotiations on the reform of Common Agricultural Policy in 1999, the Council undertook to make a mid-term examination of the system in 2003 "in the aim of putting an end to the current quota system in 2006".