Dairy market situation 2009
|The European Commission will continue do all it can to
support milk farmers and stabilise the dairy market. In its
dairy market situation report, published on 22 July
2009, the Commission sets out the catalogue of measures
available to help alleviate the very difficult market
In a nutshell
- The Commission will continue to use instruments such as
intervention, private storage aid and export refunds.
- It will allow direct payments to farmers to be paid
early and has just launched a new round of dairy promotion
- Other potential measures include using levies on
producers who exceed their quota to finance voluntary
retirement from milk production, and the extension to
farmers of the Temporary Crisis Framework for state aid.
- Member States also have the possibility to redistribute
aid to the dairy sector under last year's Health Check
agreement, while there are a number of possibilities to help
milk farmers within Rural Development policy.
- The Commission is continuing its examination of
potential anti-competitive practices in the food supply
chain, especially the dairy sector.
- In line with the conclusions of the June European
Council, the Commission will not reverse decisions already
taken on the quota system.
The Commission opened private storage aid for butter
at the beginning of January, and so far this year 113,500 tonnes
have been stored. The period for PSA will be extended to the end
of February 2010.
Intervention buying started on 1st March for butter
and skimmed milk powder and the Commission has now proposed to
extend it until 28 February 2010, when the new intervention
season begins. The Commission has also proposed that it be
empowered to do the same in 2010 if the market situation
requires. So far, 81,900 tonnes of butter and 231,000 tonnes of
SMP have been bought.
Export refunds for dairy products were reactivated in
January. Refunds have been awarded at a prudent level to allow
our exporters to compete without undercutting world prices. The
Commission will continue to provide refunds for as long as
The EU school milk
scheme has recently been improved and discussions are now
ongoing to make it more attractive still.
The Commission will exceptionally allow Member States to
pay up to 70 percent of direct payments to farmers from 16th
October instead of 1st December.
Member States may also grant de minimis state aid or loans
at market conditions to help milk producers with liquidity
A modification to the Temporary Crisis Framework for
state aid could be envisaged.
This could allow up to €15,000 to be paid per farmer up to
the end of 2010, minus any de minimis aid received by the farmer
Earlier this month, the Commission proposed an additional
round of dairy product promotion programmes.
The Health Check
introduced the possibility to redistribute a certain amount of
direct payments between farmers and sectors within a Member
State. They can, for example, establish specific aids for
vulnerable types of farming in the dairy sector.
Rural Development policy has a number of measures to
help restructure the dairy sector. The Health Check identified 'dairy
restructuring' as one of the new challenges on which money added
to the Rural Development fund may be spent.
Options include early retirement, investment support,
payments for milk farmers in Less Favoured Areas, support for
environmentally-friendly forms of milk production, and aid for
practices which improve animal welfare.
The Commission is implementing the Road Map proposed in its
Prices in Europe, and is looking at setting up a new system
for price monitoring.
It is also examining potential anti-competitive practices
in the food supply chain, especially the dairy sector. If the Commission finds that competition is not functioning,
it will not hesitate to use all its powers under the Treaty.
National competition authorities have an equally important role
Dairy farmers should be encouraged to co-operate more
effectively through producer organisations to increase
their bargaining power.
The quota system
The European Council called for 'possible options for
stabilising the dairy market, while respecting the outcome of
the Health Check'.
Changes to the quota system would not respect the outcome of
the Health Check. This therefore excludes the idea of quota cuts
or a freeze on the already agreed quota increases.
Production is, in any case, currently 4.2 percent below
The Commission suggests that Member States could charge super
levy on those producers who exceed their individual quota and
use the money to finance voluntary retirement from milk
production or redistribute it to priority groups.