Brussels, 08/10/2009 (Agence Europe) - On Friday 9 October, the European Commission is to adopt, by written procedure, a proposal aimed at amending Regulation 1234/2007 on common market organisation (CMO) in agriculture (single CMO regulation), to address the crisis in the milk and dairy products sector. The aim of this proposal to be examined by the Agriculture Council in Luxembourg on 19 October will, first of all, be to facilitate restructuring of the sector and, secondly, allow the Commission to take action in the future in the event of upheavals on the dairy market.
The Commission thus almost brings to an end the short term proposals that it had pledged to take on 17 September this year. All that remains is the rise from €7,500 to €15,000 in the ceiling of national aid that EU countries may grant farmers. This decision by the Commission on national aid will be taken end October.
Buying back of quotas. The Commission suggests that member states be given the possibility to grant compensation to producers who undertake to abandon permanently all or part of their milk production and place the individual quotas thus released in the national reserve and this during the 12-month periods starting on 1 April and 1 April 2010. Explanation: Articles 65 to 84 of the Regulation 1234/2007 (single CMO) lay down provisions for the management of the quota system in the dairy sector. For the purpose of restructuring milk production in the Community, Article 75 of the regulation gives member states the possibility to grant compensation to producers who undertake to abandon permanently all or part of their milk production and place the individual quotas thus released in the national reserve. In order to stimulate the necessary restructuring further, the Commission suggests the surplus levy payable by the milk producers should be calculated on the basis of the national quota reduced by the individual quotas bought-up, subject to the condition that those released quotas remain in the national reserve in the quota year concerned. Given the necessity to reinforce the financial instruments for further restructuring of the sector, member states should be allowed to use for the same restructuring purposes the additional money collected on the basis of the new calculation method. This calculation method should be applicable on a temporary basis, for the 12-month periods starting on April 2009 and 1 April 2010 and only as regards milk deliveries in order to limit the measure to the extent necessary. The quota buy-up should reduce milk supply and thereby reduce the production of surplus products needing support, leading to a reduction in budgetary needs. “This reduction will depend on the market situation at the time and is not quantifiable at the moment”, the Commission explains.
Swifter response in event of market upheaval. During the discussion at the Council meeting on 7 September 2009 concerning the communication from the Commission to the Council on the dairy market situation 2009, member states required the Commission to adapt market instruments or create new ones in order to be able to react effectively to the increasing price volatility in a swift and flexible manner. The Commission suggests extending the scope of Article 186 of the single CMO regulation to enable it to take measures with regard to the dairy sector in cases of market disturbances where internal market prices significantly rise or fall.
The most recent data show that prices are improving not only for all dairy commodities but also for raw milk at the farm gate. The average milk price in July/August is estimated at 25-26 cents/litre and recent information from major European processors suggest a further increase of 1-2 cents for delivery in September/October. Spot prices for milk have increased substantially more since June. Prices for products eligible for intervention (butter and skimmed milk powder) have increased by 7-9% in 3 months and they are now well above the intervention level.
The Commission expects to spend up to €600 million on market measures this year. The Commission proposal to extend the intervention period will be voted on by the Council on 19 October. Seventy percent of direct payments may this year be paid 6 weeks earlier than usual (from 16 October). As part of the 2003 CAP reform, an additional €5 billion per year was added to the direct payments of dairy farmers to compensate for reductions in intervention prices. Under the Health Check and the Economic Recovery Package, an extra €4.2 billion is available to address new challenges, including dairy restructuring. This comes on top of what is already available in rural development policy. The Commission has also reinforced the school milk programme by extending the range of products and the age groups of children covered by the scheme. It has also opened a new round of promotional measures for dairy products. The Commission is currently preparing a report into the supply chain in the dairy sector, to increase transparency and ascertain whether there are any problems of competition. This will be published before the end of the year and will be discussed by the high level group. (L.C./transl.jl)