Brussels, 08/07/2009 (Agence Europe) - As it undertook to do as part of the measures to help milk producers survive the crisis, the European Commission adopted a proposal on Wednesday 8 July that will see the public intervention period for butter and powdered milk extended until 28 February 2010. The intervention period was due to end on 31 August. The Council of EU agriculture ministers is expected to discuss this text at its next meeting on Monday 13 July.
In January 2009, the Commission initiated aid for the private storage of butter, reintroduced export refunds for dairy products and it has continued to buy butter, through intervention, beyond the 30,000 tonne ceiling and skimmed milk powder beyond the 109,000 ceiling under a tendering system at prices close to fixed intervention buying-in prices.
Export refunds have been set in a very prudent and cautious way in order to avoid undercutting world market prices.
The quantities which have been bought through intervention (81,000 tonnes of butter and 203,000 tonnes of skimmed milk powder until 25 June 2009) show that there continues to be a serious imbalance in the market, to some extent seasonally-related, with peak production in the first half of each year, the Commission says in setting out the reasons for the proposal. It adds that closing intervention on 31 August 2009, as is provided for in the regulation “is likely to cause prices to fall below intervention level and thus create a serious disturbance on the market with repercussions for already very low farm gate prices”.
Given the exceptional situation, public intervention for butter and skimmed milk powder should, the Commission says, be extended through a tendering procedure for the current intervention period until 28 February 2010. Furthermore, with the uncertainty over the timing of the expected recovery of the dairy market, the Commission should be authorised to extend the intervention period for the 2010-2011 intervention season, once again through a tendering procedure, if the market situation requires it. “These measures will signal confidence in the future of the dairy market,” the Commission says. In the medium and long terms, it is expected that demand will pick up and prices are expected to normalise once the economic and financial situation improves and buyers' behaviour returns to normal.
€12.5 million for butter, €14.4 million for milk powder. The Commission estimates that 50,000 tonnes of skimmed milk powder and 31,000 tonnes of butter will be bought through intervention during the extension period. It suggested that these additional amounts should be stored for two years before being sold on the market at intervention prices. In the light of these estimates, spending on butter will be €12.5 million over financial years 2010 to 2012. Total spending for skimmed milk powder is calculated at €14.4 million over the same period. (L.C./transl.rt)