Brussels, 16/07/2009 (Agence Europe) - In an interview to EUROPE, the Italian minister of agriculture, Luca Zaia, presented his country's proposal for solving the current crisis affecting milk producers in Europe. (L.C./trans/rh)
Agence Europe: The majority of European agriculture ministers gave their support on Monday 13 July, to the proposal to extend until the end of February 2010, intervention on butter and milk powder. But not Italy, what do you propose in its place?
Luca Zaia: Until now, the policy applied by the European Commission to tackle the serious crisis market crisis focuses on purchasing and withdrawing butter and skimmed milk powder, for total annual spending of €600 million, therefore, around €1.2bn over two years.
But, despite the significant public intervention practised till now, we have not seen any improvements in market prices since the beginning of the massive purchasing operations by the Commission (1 March 2009).
Italy has, on the contrary, proposed using the funds aimed at withdrawing butter and milk powder for a programme that not only benefits the big producers and processing firms, but which provides accompanying measures to firms abandoning production and which are already marginalised and which in the long term, will, in any case, be excluded from the market.
This intervention would be much more effective in Europe, where 80% of companies are made up of small concerns. This applies to Eastern European countries but not just to them. In effect, in the most productively structured countries, there are still small farms that have fewer than 20 cows: in France, these make up 6.2% of the total, in Germany 11.9%, making almost 50% of the total.
AE: Italy's idea would consist in setting up a kind of reserve of quotas, with a public purchasing price. How can these quotas be used and allocated?
LZ: Our programme is based on a payment for a 20/100 kg quota bonus, which producers would decide to allocate each member state and which would not be allowed to reallocate the acquired quotas to other producers. Getting rid of the quantity in question would therefore be definitive and would not require other intervention applications. This is different to what we have had so far with the choices made by the European Commission and which has had to repeat butter and milk powder market withdrawal interventions.
If Europe were to accept the Italian proposal, it would be possible to take 6 million tonnes of milk off the market once and for all.
We believe our plan works well with the market because it allows each producer to decide whether or not to continue with production: this is a better choice than the interventions currently used (which have caused distortion of the market) and than hypothetical compulsory reductions in national quotas, which would, in fact, be binding requirements on producers' usual conduct.
AE: How does Italy see the dairy market developing and what measures is it seeking for cheese producers?
LZ: The crisis in the dairy sector is not just affecting Italy, it is affecting every European country. So there has to be a change at European level. We cannot agree with the proposal from those who would like to direct aid towards powdered milk or butter, because that would only help processing companies, without any benefit for producers who are the foundation on which European agriculture is built. Our argument focuses on milk prices and production costs, which, paradoxically, penalise quality products.
It is essential that the price setting mechanism is monitored and supply and demand matched, and, in so doing, a satisfactory solution for all segments of the sector, from producers to processors, to consumers and distribution, is reached.
AE: Lastly, France and Germany want to suspend the automatic 1% quota increase in 2010. What does Italy think of this?
LZ: I, too, believe that reduction of production is desirable, but it is not necessary to suspend quota increases that were decided on in November of last year. The volume of production can be limited by support for the voluntary abandonment of production that I have just spoken of. Thus the objective of reducing supply is reached by the voluntary choice of companies and not imposed from outside.
AE: How would you sum up the Italian position on the changes to the Common Agricultural Policy (CAP) after 2013. Should the CAP budget be reduced, shared differently between sectors or between pillars?
LZ: I believe that, even after 2013, European farmers will have to be guaranteed the same level of support as today. We ask our farmers to produce in compliance with the most severe rules on healthy products, respect for the environment and animal welfare. It is only fair that they be remunerated for this, otherwise they would be facing unfair competition from producers from third countries who do not have to meet the same rules. I believe, too, that the CAP needs more flexible instruments to address market crises. It would be useful to be able to take account of market trends to help direct some of the direct aid that we pay every year to farmers.
AE: Does partly national funding of the CAP seem to you to be a plausible option?
LZ: It may not be my preferred option, but it might be considered, if it were necessary to ensure the current level of support. It should, however, be compulsory co-financing by member states, otherwise it would open the door for differentiated decisions and, therefore, for competition distortions between member states. (L.C./transl.rh/rt)