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Policy instruments for the dairy sector

Policy instruments for the dairy sector

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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 evolved overtime following the market orientation approach of the Common Agricultural Policy.

The milk sector and milk products 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 and 2016 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, to be bought in at a fixed price. Once these volumes are reached, intervention continues by tender until the end of the intervention period.

Public intervention stocks are sold back on the market via a tendering procedure, opened by a Commission Regulation.

A tendering procedure for the sale of intervention stocks of skimmed milk powder was opened by 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 Milk Market Observatory page. Information about tenders and quantities available for the next sale are displayed in 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

Private storage

Another market instrument is the aid for private storage of butter, SMP and cheeses with a Protected Designation of Origin (PDO)/Protected Geographical Indication (PGI). This aid supports part of the storage costs while the products are temporarily withdrawn from the market. The opening of private storage aid is not automatic (unlike public intervention) and requires the adoption of a Commission regularion.

Private storage schemes for butter and SMP traditionally finance storage costs for a minimum period of 90 days and a maximum of 210 days (this is defined in the Commission regulation opening the scheme). The aid usually comprises a fixed rate per tonne, plus a daily amount per tonne.

Exceptional measures

Exceptional ad-hoc measures can be mobilised in case of severe market disturbance as provided for in the CMO Regulation (EU) No 1308/2013.

  • 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 following are two examples of exceptional measures for the dairy sector implemented under Article 219 of the CMO in 2016:

Milk package

The so-called "Milk Package" introduced a series of instruments to better structure the supply chain in the dairy sector, to improve its resilience following the end of the quota system in 2015. It has been fully applicable since 3 October 2012.

Milk Package

Aid schemes

The European Union (EU) school scheme, applicable since 1 August 2017, supports the distribution of fruit, vegetables,milk and certain milk products to schools across the EU as part of a wider programme of education about European agriculture and the benefits of healthy eating.

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.

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:

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.