Brussels, 15/10/2009 (Agence Europe) - Producers of milk and milk products, who are in full crisis and calling for aid to pull them out of it, could have done without this latest report published on Thursday 15 October. In its report, the European Court of Auditors considers that the EU dairy policy (milk quotas and selling measures) has only very partially reached its objectives, namely market equilibrium, stabilisation of prices of milk and milk products, a fair standard of living for producers, and improved competitiveness. The Court also identifies three risks weighing upon the future of the sector, in the context of liberalisation of the dairy market.
Publication of the report therefore coincides with strong concerns of the moment. The decision of principle to carry out an audit on the subject was taken by the Court over two years ago, at a time when the dairy sector was not a topical a subject as it is today. In its main messages, the Court of Auditors notes that management instruments are “partially” successful in reaching the different objectives. Quotas have indeed allowed a framework for production but at too high a level to avoid over-production. Also, the Court notes that price volatility had long been avoided but that production prices have in fact constantly declined in real terms, while consumer prices have constantly increased. Between early 2000 and mid-2007, real consumer prices for dairy products increased by 17% while the real price paid to the producer fell by 6%.
It has been impossible to maintain the average income of milk producers over the past ten years without constant increases in productivity, greater subsidies, and the disappearance of a very large number of farms. Also, the Court states, the competitiveness of European milk producers on the global market is not very good for basic products, such as butter and milk powder, as world prices are generally lower. Competiveness is, on the other hand, far better for high added value products such as cheeses, less dependent on price levels.
The Court highlights three major factors which it believes should be taken into consideration due to their budgetary, economic and social impact: - market stability and price volatility which can lead to rapidly recreating large surpluses; - faster restructuring with the risk of greater geographical concentration of milk production and the disappearance of a very large number of producers in less advantaged rural areas; - and the question of the sector's competitiveness, which depends on its ability to adjust to world demand in terms of the price, but also quality, of its products.
These findings and these risks lead the Court to set out the following recommendations: - necessary Commission supervision of market developments, above all to prevent the reappearance of massive surpluses; - monitoring of the production and consumer price formation processes in the dairy sector, given the weight of the processing and distribution side of the sector; - strategies to be implemented to face up to the double risk of geographical concentration of production and the disappearance of producers in less favoured areas, such as mountainous areas; - and production orientation first and foremost towards satisfaction of the domestic market and, at the level of the global market, towards the production of high added value products such as cheeses.
Milk is one of the main agricultural products of the European Union: - over one million farms annually produce 148 million tonnes of milk for an approximate value of €41 billion, which corresponds to 14% of the value of European farm production (in 2006). Also, over 60% of beef and veal produced in Europe come from the dairy sector. The EU is the leading area in the world for milk production (27%), ahead of India (20%) and the United States (16%), and the processing of milk employs 400,000 persons in the EU, for a total turnover by way of €120 billion. The fat and milk proteins of milk are used to advantage in the production of cheeses, butter and milk for drinking. The Court also specifies that the total cost of the dairy sector for taxpayers reached over €4,500 million in 2007, that is, 64% more than spending for this sector in the 2005 budget. In 2014, when the new member states receive full payment, milk premiums and decoupled supplementary premiums may, alone, total over €4,700 million. To this must be added spending for intervention, selling measures and export refunds in so far as these market instruments will not have been totally discarded, the Court says. (L.C./transl.jl)