Agriculture and rural development

Policy instruments for the dairy sector

Policy instruments for the dairy sector

Milk and milk products
Policy instruments for the dairy sector

The EU's dairy policy dates from the 1960s. It helps to create stable market conditions for EU milk producers and processors. The policy has been continuously updated.

The milk sector is integrated into the Common Organisation of the Markets in agricultural products  (CMO Regulation (EU) No 1308/2013 of the European Parliament and of the Council). Several market tools are available in the dairy sector: they provide a safety net in case of serious market imbalance.

Overview of measures taken since 2014 in the wake of the Russian import ban and, later on, global market imbalance.

 

Public intervention and private storage

Public intervention

One of these market tools is the buying-in of butter and skimmed milk powder (SMP) into public storage – known as "public intervention".

Between 1 March and 30 September each year, a maximum quantity of 109,000 t SMP and 50,000 t butter complying with specific quality requirements can be offered by private operators. Once these volumes are reached, intervention continues by tender until the end of the intervention period (that can be extended under exceptional circumstances).

When market conditions so allow, butter and SMP are sold back on the market via a Commission Regulation.

Given the situation on the skimmed milk powder market in terms of price recovery and the high level of intervention stocks, the sale of skimmed milk powder from public intervention was opened by a tendering procedure at the end of November 2016.

Deadline to submit offers for the tender: on the first and third Tuesday of the month at 11.00 (Brussels time). If Tuesday is a public holiday the time limit shall be 11.00 (Brussels time) on the previous working day.

For the latest update on volumes, please refer to the MMO page. All information about tenders including quantities available for the next sale, page 4.

 

Intervention agencies - paying agencies

The Paying agencies of the Member States are responsible for managing and ensuring control of operations linked to intervention measures in the milk and milk products sector.
 

>> List of paying agencies

>> More about public intervention since 2014 

 

Private storage

Another market tool is the granting of support (aid) for the private storage of butter, SMP and cheeses with a Protected Designation of Origin (PDO)/Protected Geographical Indication (PGI). This aid helps operators by taking products temporarily off the market, but differs to public intervention, as the goods remain under the ownership of private operator. The granting of private storage aid by the Commission is optional.

Recent schemes introduced in the milk sector provide for the possibility of financing storage costs for a minimu period of 90 days – and a maximum of 210 days. The aid available comprises a fixed rate per tonne, plus a set daily amount per tonne. The products concerned remain the property of operators, who are responsible for selling them once the contractual storage period has elapsed.
 

>> More about private storage since 2014 

 

Exceptional measures

Specific ad-hoc measures included in CMO Regulation (EU) No 1308/2013 can be mobilised in case of severe market disturbance.
 

  • Measures against market disturbance (art. 219 CMO)
  • Measures concerning animal diseases and loss of consumer confidence (art. 220 CMO)
  • Measures to resolve specific problems (art.221 CMO)
  • Measures concerning agreements and decisions during periods of severe imbalance in markets (art.222 CMO).
     

The above mentioned tools have so far resulted in the following measures: 
 

  • Commission Delegated Regulation (EU) 2016/1612 of 8 September 2016 providing aid for milk production reduction – part of the "2016 July Package"
     
    • The quantities covered by aid applications submitted for the last quarter of 2016 do not exceed the total maximum volume (1.07 million tonnes). Authorisations may therefore be granted for quantities notified to the Commission for cow milk delivery reduction in October, November and December 2016. Applications have been received for a total of 1.06 million tonnes from 51 955 milk producers.
    • The quantities covered by aid applications submitted for the 2nd reduction period (November 2016 - January 2017) exceed the total maximum volume available (12 198 tonnes). Applications have been received for a total of 97 880 tonnes from some 6000 milk producers. An allocation coefficient has therefore been calculated. It amounts to 0.12462762 and applies to the quantity covered by each aid application received for the 2nd reduction period. Only the publication in the Official Journal is authentic (expected on 19 October).
    • See here: Total uptake of the milk production reduction scheme covering both rounds and taking account of the allocation coefficient for the second round.
    • An allocation coefficient being fixed, it is no longer possible to submit applications for the next reduction periods.

    >> More about the milk production reduction scheme
     

  • Joint agreements/decisions on milk production planning – part of the "2016 March Package"
    On 13 April 2016, the Commission activated, for 6 months, the possibility for producer organisations, interbranch organisations and cooperatives in the dairy sector to establish voluntary joint agreements on milk production planning (producer organisations, cooperatives).

    This was prolonged by the Commission Implementing Regulation (EU) 2016/1615 of 8 September 2016 amending Implementing Regulation (EU) 2016/559 as regards the period in which agreements and decisions on the planning of production in the milk and milk products sector are authorised,  for 6 months until 12 April 2017.

 

Milk package  – 2012

A major amendment to the CMO Regulation, known as the Milk Package, was adopted in 2012.

The regulation deals with contractual relations in the milk sector and provides for written contracts between milk producers and processors and for the possibility for farmers to negotiate contract terms (including the price) collectively via producer organisations.

It also sets out specific EU rules for inter-branch organisations, facilitating actors in the dairy supply chain to dialogue and carry out certain activities.

The package also entails measures enhancing transparency in the market and possibilities for the supply management of cheese covered by a Protected Designation of Origin (PDO) or Protected Geographical Indication (PGI) under specific conditions.
 

>> More info on the Milk Package

 

Aid schemes

Aid is paid for the supply of milk products to pupils under the so-called School Milk Scheme. A Union aid of € 18.15 / 100 kg –limited to a maximum of 0.25 litre of milk equivalent per pupil and per day - can be supplemented with national resources. A new scheme will be introduced in 2017.

 

Milk quotas

The milk quota regime which had been introduced in 1984 in order to address problems of surplus production expired on 1 April 2015.
 

>> More on the end of milk quotas

 

Marketing standards

Milk and milk products or spreadable fats must comply with specific standards to be marketed in the EU (Article 78 CMO).
 

Definitions, designations and sales description for:

>> milk and milk products

>> drinking milk

>> spreadable fats

 

Eu promotion programmes relating to the dairy sector

In the latest wave of EU Promotion Programmes published on 21 April 2015 there are six new information and promotion programmes for the dairy sector.

All six are targeting third country markets - worth nearly EUR 12.2 million from the EU budget over three years (details in this table).

As they are 50 % co-funded by public or private funds, the total investment through these programmes will be nearly EUR 24.4 million.

Most of these programmes were due to start in the middle of 2015.

These new programmes come in addition to 14 ongoing multi-annual programmes for the dairy sector which were launched between 2011 and 2014 – four in 2011, three in 2012, six in 2013 and one in 2014.

Nine of these ongoing programmes target third countries (worth just under EUR 31 milliontotal budget – half of which is EU-funded).

The five others target the internal market for a total amount of EUR 26.4 million(also 50 % EU-funded) – including a "multi country" programme in seven Member States worth EUR 16 million.

Altogether the 20 new or ongoing promotion programmes for the dairy sector are EUR 82 million of which 50 % are EU-funded.

 

Trade with third countries

The EU is a major player for dairy exports worldwide and is the biggest cheese exporter. Since 2009, exports have been carried out without export refunds. Dairy exports under certain quotas opened by third countries are subject to the issuing of an export licence.

An import regime applies to the entry of dairy products into the EU. Preferential imports are subject to the issuing of an import licence and, in general, payment of an import duty (tariff). Several trade agreements, multilateral and bilateral, have resulted in preferential imports at reduced or zero duty, mostly in the form of import quotas.

 

Direct payments, rural development programmes, quality, public and animal health

The dairy sector also benefits from direct aid and rural development programmes. It is covered by the EU quality policy and has to comply with a number of constraints and rules, notably related to public and animal health.