On 10 December 2012 the Commission adopted its second report on the evolution of the market situation and conditions for a smooth phasing out of the milk quota system, as requested by the Council as part of the 2008 CAP Health Check.
The report, which has been forwarded to the Council and the European Parliament, concludes that the "soft landing" is on track: in the vast majority of Member States, quotas are no longer relevant to limiting production and the quota price (paid by farmers seeking additional quota) is already zero or close to zero.
Medium and long term prospects are favourable for the dairy sector in line with population growth and interest for western diet in emerging economies. This does not, however, prevent short term market fluctuations.
Price developments since the publication of the first soft landing report in 2010 show a trend towards higher levels with some ups and downs along the curve. The current difficulties endured by dairy farmers in certain areas more severely hit by the hike in the price of feedstuffs do not hide the overall positive picture of the sector.
In the long run, the balance between supply and demand depends on a large variety of factors, ranging from economic parameters to policy decisions. In this respect, the so-called Milk Package which has been fully applicable from 3 October 2012 offers tools for operators in the dairy supply chain to adapt their supply to market demand.
As a further step for an overall assessment of the milk sector, the European Commission has - following an open call for tenders - commissioned an independent analysis of future developments in the milk sector from 2015 onwards.
The Commission will submit to the European Parliament and the Council by 30 June 2014 a report on the implementation of the Milk Package. The report will assess in particular the effects on milk producers and milk production in disadvantaged regions, in connection with the general objective of maintaining production in these regions, and cover potential incentives to encourage farmers to enter into joint production agreements.
Article 184(6) of Council Regulation (EC) No 1234/2007 of 22 October 2007 establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products (Single CMO Regulation) provides for the Commission to present a report to the European Parliament and Council before 31 December 2010 and 31 December 2012 on the evolution of the market situation and the related conditions for smoothly phasing out the milk quota system, accompanied if necessary by appropriate proposals.
The so-called first soft landing report was published on 8 December 2010 while the present one constitutes the second report.
This second report is made up of three parts:
- the first one describes the evolution of the market situation for cow milk from the middle of 2010 and outlines medium term prospects,
- the second section examines how the phasing-out of the milk quota system has occurred
- while concluding remarks are presented in the third chapter.