President Roquefeuil, ladies and gentlemen of the FNPL,
Bonjour, and thank you for your welcome. I was very happy to accept the invitation to this 73rd Congress of the FNPL. It is vitally important that European Commissioners meet and directly engage with the sectors of the economy that they represent. So I am pleased to have this opportunity to stand before you and have an open and constructive dialogue.
Since my appointment as Commissioner, I have been listening closely to the views of French dairy farmers, particularly during my annual visit to the Salon de Paris two weeks ago, in December at the European Dairy Platform in Nice, at the Espace in Rennes last September, in Clermont Ferrand in October and through my many regular meetings with Copa-Cogeca.
And I want to tell you that whenever I meet dairy farmers, I feel like I'm coming home. I grew up on a small dairy farm in Ireland's south-east, and I represented a rural area with a strong dairy sector for over 30 years in the Irish Parliament.
I understand the challenges involved in your job; I know that dairy farmers are on duty 24 hours a day, 7 days a week, 365 days a year. I recognise and value the huge contribution you make to the quality, safety and sustainability of our European milk supply.
My job is to give you and your families the strongest possible chance of success, today and for the future. This is a time of great change and great challenge in the dairy sector, and indeed in the agri-food sector as a whole.
I have heard the concerns expressed by President Roquefeuil. I know them. I understand them. And I have been doing everything in my power to provide real and lasting solutions to these problems since becoming Commissioner two and a half years ago. I inherited the 2013 reform of the CAP from the European Council of Agriculture Ministers and the European Parliament.
It is also my duty to be honest with you, to provide you with the facts, and to talk with you face to face about the political reality for Europe's farmers in 2017. I am here to deliver one message loud and clear: I am 100% convinced that the Common Agricultural Policy remains the best hope for France's dairy farmers to succeed, today and in the years to come.
Why do I say this? Because the facts show that the European Union continues to strongly support dairy farmers in good times and bad. As your Commissioner; as a proud advocate for this sector; as a defender of our hard-working family farmers; let me remind you of those facts.
When I took office in 2014, Europe was entering a profound and lasting dairy price crisis. We saw the storm clouds coming. And we took decisive action at every stage of the crisis, exhausting every legislative tool at our disposal.
Let me tell you what this meant in detail.
- It meant targeted aid for dairy farmers and farmers in other livestock sectors;
- It meant opening, extending and enhancing Private Storage Aid schemes for dairy products;
- It meant extending public intervention periods for butter and skimmed milk powder;
- It meant increasing the ceilings for buying-in of butter and SMP at fixed price.
In total, more than €1 billion has been mobilised in the form of emergency measures over this 2-year period for the dairy and livestock farmers of Europe. French farmers received direct aid of €112.8 million.
And I must remind you that this happened in a time of ongoing European economic difficulty, and in the midst of great crises for our continent.
In other words, securing these substantial resources to support our farmers was not easy.
It required a huge amount of political capital, and very hard work. But it ultimately proved the European Union's recognition of the importance of farmers, and of dairy farmers. Specific actions and financial support were identified and implemented even in the midst of such conflicting priorities.
I ask you: are these the actions of a liberal European Commission intent on leaving our farmers unprotected in a global market? Of course not. We have looked at the situation and used the best tools at our disposal to manage the market sensibly and sustainably.
President Roquefeuil, every measure you and the late Xavier Beulin asked for at the Salon de Paris in 2015 has been implemented, including a voluntary reduction production scheme - a measure which had never been done before, but which has been a clear success.
This programme has a budget of €150 million for a targeted reduction of 1.07 million tonnes.
And France clearly recognised the importance of this scheme. This country has the highest number of participants, with 15 000 farmers, which is 4 000 more than Germany in second place.
The first period of the scheme, from October to December 2016, targeted the largest reduction in terms of volume. During this period, 11 300 French farmers have applied for the payment, resulting in a total production reduction of 150 000 tonnes.
And the good news is that these measures have started to bear fruit. There has been a slow but unmistakeable price recovery, with the milk market witnessing a rising trend for a number of months.
EU average farm gate milk prices have increased by 31% since last summer, up to 33.7 c/kg in February.
It is true that the price increase in France has not been as great, with an average increase of 23%, but this is partly because the price fall was lower in this country.
And the estimated average price in France today is 35.2 c/kg. Is this a perfect recovery? Of course not. But is it evidence that things are moving in the right direction? I would say yes.
And I would add that if we had raised intervention prices in 2015, as many politicians in France and across Europe demanded at the time, we would now be in a far weaker position, with far greater amounts of SMP in intervention.
But I also acknowledge that, while we are moving in the right direction and there is clear evidence of price recovery, this recovery is fragile and we all have an interest in - and responsibility for - protecting it. We know that there are a number of factors, identified in the Commission's short-term outlook for EU agriculture, which could weigh on the dairy market this year.
Shortly, we will be at the seasonal peak in EU milk collection. Apart from the need to ensure careful management of the stock of SMP currently in intervention, about which I will say more in a few moments, milk deliveries in 2017 are expected to be 0.6 per cent above last year. Indeed, in Poland the January milk collection was 3.6 per cent up on 2016.
If raw milk prices remain stable in 2017, a significant increase in milk collection could be expected in the second half of the year.
We also anticipate a continuing increase in production in the United States this year, as well a recovery in production in New Zealand.
I mention these factors simply to make the point that, despite the recovery seen in recent months, we know that there can be no room for complacency, and the first step in ensuring that we are not complacent is to recognise the risks with which we are faced.
Only then, can we deal with them together. This is a challenge to us collectively and I want to work with you and your representatives, as well as other policy makers to ensure that we make the right choices for the wellbeing and profitability of your farms.
The Commission has at all times acted to manage the market responsibly. I'm pleased to say that France has taken full advantage of the benefits brought by the Milk Package. Let me give you a few examples.
51 Producer Organisations have been recognised, and these organisations have concluded collective negotiations for 5 million tonnes in 2015 – this accounted for 44% of French milk deliveries outside cooperatives.
And France has adopted prudent supply management arrangements for 4 types of protected cheeses. This is bringing positive results in terms of price stabilisation and the protection of production in disadvantaged areas.
The report on the Milk Package adopted last year shows that POs are an effective instrument to protect farmers and improve their position in the supply chain - they are making a real difference in terms of price stability and security of milk collection.
In addition, in a non-quota environment, POs are essential for the effective transmission of market signals between processors and producers.
I encourage French farmers to improve and strengthen this collective approach, which will benefit you in the future.
Let me turn next to the lessons learned in relation to the Commission's approach to public intervention during this crisis.
The public intervention mechanism played an important role in 2015 and 2016 in stabilising markets and removing surpluses in an extremely imbalanced scenario.
In line with my consistent commitment to the sector, I gave instructions on two occasions to increase the volumes under which public intervention of SMP takes place at fixed price.
I believe that this was the right move at the right time to give certainty to the sector.
But now we find ourselves with 350 000 tonnes of SMP in public stores: equivalent to some 30% of annual EU production.
Releasing them on the market might disturb the improvement taking place. But keeping them in the stores also weighs on the market and prevents a healthy recovery.
This shows that, in rugby terminology, public intervention is like an up-and-under kick: it momentarily removes the pressure, but does not make it disappear.
I assure you that the Commission will act cautiously and prudently in returning these stocks to the market, always keeping our farmers' interest at heart. For the moment, we have refused all offers, which is a clear indication of our commitment not to disturb the market.
And let me say very clearly that the Commission will not under any circumstances sell this product until such a time as the price is right.
However, no matter how simple it sounds, the solution to public stocks is not to build them.
I am sure we all agree that in these times, buying surplus production with public money should be regarded as a failure in the system, to be used as a last recourse.
I refer again to the importance of market orientation.
And I want to remind you that there are huge opportunities on global markets. French and European dairy farmers produce the highest quality products in the world, and the expanding global middle class is looking for these products to feed their families.
World consumption of milk and dairy products is expected to grow by 1.8% globally in the next decade. This is why I have been travelling the world to find new markets for our dairy products.
In 2016 I went on a Diplomatic Offensive to intensify and create new trade relationships with third countries. I visited Mexico, Colombia, Japan, China, Hong Kong, Vietnam and Indonesia – each time bringing a delegation of EU agri-businesses with me, including dairy sector representatives. This year I will visit Canada, Iran and Saudi Arabia.
And this work is paying off: our most recent figures for EU agri-food trade showed monthly exports at a record level of €11.7 billion, adding up to a 12-month value of more than €130 billion.
This means that the EU now has a positive agri-trade balance of almost €20 billion, compared with €2.6 billion just 6 years ago. This makes us comfortably the world largest agri-food exporter.
The dairy sector accounts for more than half of our current agri-trade surplus – a fact which confirms your importance. However, we need to do more to ensure that these markets translate to better prices for our farmers.
Now let me return to the question of where your best hopes for the future lie. President Roquefeuil mentioned that one of our 28 Member States has chosen to leave the Union.
And it was a source of great disappointment to me that a majority of UK farmers voted to support Brexit.
They were sold a seductive vision by politicians who found it expedient not to dwell on hard facts. They were told that if they freed themselves from the European Union, a renationalised agriculture policy would serve them better in the future.
Of course, that seductive vision has now gone up in smoke, and the most recent statement by the British government indicates that UK farmers will not be guaranteed an income support under their renationalised agriculture policy after 2020. Meanwhile, the likelihood of leaving the single market and customs union means that British farmers are increasingly fearful for their future.
There will always be politicians who sell dreams that are completely unconnected to facts or reality.
Are French farmers going to follow the British example of income uncertainty and no strong safety net? French agri-food exports of €38 billion to the EU market and of €23 billion to third countries are at risk.
Today, the UK is talking about a quick, favourable Free Trade Agreement with the USA to compensate for its economic losses after leaving the EU. But what will the UK have to sacrifice to get an agreement? What price are they willing to pay?
A future UK trade deal with the US will inevitably involve lowering food standards – this could lead to the introduction of hormone beef and chlorine treated chickens into the UK.
We would never accept a lowering of our standards in the EU, and we have been consistently effective in protecting standards in all our global trade agreements.
Let no one say that the CAP and the EU are not there to support farmers:
French farmers will receive over 9 Billion a year in CAP support every year until 2020. France is the biggest beneficiary of the CAP. The average French dairy farmer receives €30,000 per annum in direct payments. Do not risk these payments in the same way as British farmers.
Instead, we should work together to simplify and modernise the CAP in a way that addresses many of your concerns.
Already, in just two years, I have introduced a large number of measures to simplify the CAP to benefit farmers and paying agencies. I have reduced penalties and controls; introduced a "yellow card" system for first-time offenders; and I am giving more flexibility to your Government to respond faster and better to crises in the future. These legal proposals are now in the European Parliament.
And I want to do much more, but I need the help of France and of French farmers to do this. The next year will be an important one for European farmers, and I am determined to ensure a CAP that is adequately funded, simpler to administer, more modern, more responsive and fairer.
President Roquefeuil, you said that you would like the CAP to demonstrate some recent successes to inspire our farmers, not just talk about fulfilling its founding mission of 1962. Let me tell you about the recent successes.
Thanks to our farmers, food security is ensured in Europe. President Juncker himself has underlined the geostrategic importance of not depending on others for food.
Our citizens enjoy the highest quality, safest food and drink products in the world, because of the hard work and ingenuity of our agri-food sector.
Farmers, you have helped to make us the world's largest agri-food exporter. And in a time when other global players are turning inwards, we will find huge new opportunities if we continue to look outwards.
France is a great trading nation, and yet I have the impression that the value of exports for French agriculture is not fully understood.
The trade balance for French agri-food stands at a surplus of €15 billion in 2015. This demonstrates that consumers around the world value the quality and tradition of French food. I have full confidence in French high-quality food, and you should have the same.
As a member of the EU, and as a central player in the CAP, France benefits from the strongest trading position in the world.
Does anyone honestly believe that without the CAP, you would have the same prospects for the future?
Of course, our system is not perfect. It can always be improved. And by working together, we can and must improve it. This is why Commission President Jean-Claude Juncker announced in December that 2017 will be an important year for modernising and simplifying the policy to benefit farmers.
In February, I launched a public consultation on the future of the CAP, which is open until May 2nd. I encourage all French dairy farmers to make their voices heard. We have already had over 16,000 responses, which is hugely encouraging.
The public consultation will form the basis for a Communication on the future of the CAP, which will be published later this year and will outline a range of policy options.
And let me say that I am committed to maintaining a system of income support. I will do everything in my power to ensure that the next CAP is well funded, to support you and your families in their vital work.
I am making progress on strengthening the position of farmers in the food chain. In 2016, I established the Agricultural Markets Taskforce, which last November provided me with a report outlining detailed policy options for further action. I hope to make an announcement demonstrating further progress very soon.
The choice for French farmers is: do you want to improve and modernise the French and European agriculture policy from within, or take a risk outside the CAP, leaping into the unknown like UK farmers. Be careful what you may get.
Maintaining the highest food standards in the world does not come for free. Preserving our European family farm model does not happen without strong policy support.
The European Union will always stand by its farmers, but we also need our farmers to stand by the European Union, now more than ever.
I want France to be the powerhouse of European agriculture once again and I want you to lead the modernisation and simplification of the CAP beyond 2020.
I will make the proposals in 2018. I count on your support to convince the French government and the European Parliament to support the proposals, as well as delivering an adequate budget.