President Nalet, elected representatives,
I'm very pleased to be with you here in beautiful Nice.
As President Nalet mentioned in his opening speech, this has indeed been a difficult period for the dairy sector, or the "lactosphere," as you put it.
The dairy sector is of massive strategic importance for European agriculture and for our rural communities. Anyone who knows rural Europe is well aware of this fact. As someone who grew up on a small dairy farm in Ireland, I understood this fact long before I began this job. And restoring health and balance to the sector has been my priority since my first day as Commissioner.
That is why I have done everything in my power to support the sector during this difficult time. President Nalet said that we seem to be close to the end of this crisis – I am cautiously optimistic that this is true. Now we must work together to continue this recovery, and do our best to make sure a crisis of this magnitude never happens again.
I arrived at the Commission in the aftermath of the Russian import ban. At that time, the safety net for dairy products had been fully deployed.
From day one of my mandate I have been in close contact with Member States; regions; farmers' associations; and all other key institutions and stakeholders, for to assess the situation and devise the most appropriate EU action.
My first initiatives were the exceptional targeted aid measures for dairy farmers in the Baltic States and Finland, as these were the Member States most directly affected by the Russian ban.
And we didn't stop there. We continued to dip into our toolbox of policy options.
24 Regulations have been adopted in the last two years to support the dairy sector, in addition to horizontal measures.
Opening, extending and enhancing Private Storage Aid schemes for dairy products;
extending public intervention periods for butter and skimmed milk powder;
increasing the ceilings for buying-in of butter and SMP at fixed price;
targeted aid for dairy farmers and farmers in other livestock sectors;
authorising agreements and decisions on the planning of production in the milk sector;
exceptional adjustment aid , and
Aid for milk production reduction.
In total, more than €1 billion has been mobilised in the form of emergency measures over this 2-year period.
And I'm sure you appreciate that in a time of ongoing European economic difficulty, and in the midst of our continent's greatest ever refugee crisis, securing such substantial resources was not easy. It required a huge amount of political capital, and very hard work.
In addition, I am working on an Omnibus Proposal which sets out a range of technical changes to four basic regulations of the the CAP.
The package will include a sector specific income stabilisation tool; it will provide simpler rules for accessing credit and other financial instruments; it will propose to increase support for Produce Organisations. All these proposals respond directly to the concerns of farmers, and I want them to become effective from January 1st 2018.
This proves that the Commission's decades-old commitment to stand by our dairy farmers remains intact today.
We have explored all possible avenues to support sector in difficult times.
And I do believe that these measures have been effective in relation to their expected goals, notably market stabilisation and cash-flow relief for farmers.
It’s been a heavy burden for us all, and especially for dairy farmers, who have borne most of the load.
The Good news is that for some months now we are seeing signs of recovery:
Global demand, notably for butter and cheese, started to pick up in mid-2015;
The long-awaited reaction from the supply side finally materialised in the EU starting in June this year;
this has translated into better dairy prices, which have substantially increased in the EU since May: May: +69% for butter, +23% for SMP, +30/50% for cheeses,
and EU butter prices have now hit the historical records of 2013 (4 210 €/t).
Experts in the Milk Market Observatory (MMO) confirmed last week that prices for butter and cheese are expected to remain robust through early 2017.
This improvement is also reflected in better farm-gate milk prices: up 10% from July to October. And these prices are expected to increase further through the end of the year.
But now that prices are improving it is more important than ever that the sector remains market oriented. This was highlighted in the last MMO expert meeting.
In this context, we are currently operating the milk production reduction scheme and the exceptional adjustment aid, which should contain to some extent the expansion in production.
As long as we produce what the market demands, recovery is guaranteed. None of us has any interest in risking the balance which has been so difficult to achieve. Maintaining this balance requires an effort from all actors across the sector.
And dairy farmers have not been shy in this respect: 58,000 of them from 27 Member States are participating in the Milk Production Reduction Scheme. I am now looking for the same level of commitment from the industry.
You know your clients and their needs. I urge you to remain customer driven and produce what they require.
In this regard, let me mention the decision I have just made to open the sales of SMP out of intervention stocks.
I believe the public intervention mechanism has played its role in stabilising markets and removing surpluses in an overwhelmingly imbalanced scenario. This was done in full knowledge of the fact that this removal is temporary and the bought-in product has to find its way onto the market one day or another.
Let me remind you that in line with my full and consistent commitment to the sector, earlier this year I gave instructions on two occasions to increase the volumes under which public intervention of SMP takes place at fixed price. This was a way to give certainty to the sector in general and to the dairy industry in particular.
The uptake has been massive, to the extent that some 30% of one year of EU SMP production has been sold to public stocks. Member States have put forward some €600 million for buying that product.
It’s true that it will be recovered once the product is sold, but until that moment arrives, the financial burden is not negligible.
Some of you may say that my recent decision to open the sales compromises the recovery taking place on the protein market.
But I can tell you that, as long as butter and cheese prices remain remunerative, there is some margin for SMP to be more competitive on the world market.
And certainly there is no reason to think that such a move will prevent milk prices from reaching sustainable levels, especially given that quotations for other dairy products remain high.
In addition, we are at the beginning of the season and the instruments of the July Package to reduce production are currently in application.
I am positive that we all can agree on something: none of us wants to see intervention taking place again next spring.
The sector as a whole must think strategically: market signals must echo throughout the chain so that production matches outlet options.
But you must also understand that a truly market-oriented policy cannot rely on large-scale Commission action of this type in the future.
Instead, we must build the resilience of the sector so that it can cope with future shocks. I have taken strong action to lay these foundations, and today I am calling for your support to bring these important changes into force.
I established the Agricultural Markets Task Force to find new and better solutions to restore balance to our food chain, and strengthen the position of farmers.
Two weeks ago, the Taskforce delivered a comprehensive report to me, and my Commission colleagues are giving its recommendations full consideration.
The report concludes that the policy framework governing the supply chain "can and should be further improved."
Among the other conclusions, the report calls for new rules at EU level to cover certain Unfair Trading Practices (UTPs), as well as the implementation of effective enforcement regimes in Member States such as through the use of an Adjudicator.
Other recommendations include increasing market transparency, enhancing cooperation among farmers, facilitating farmers' access to finance and improving the take-up of risk management tools.
I will now prioritise consideration of the report and its recommendations with a view to delivering the appropriate policy response. The importance of the issue is already acknowledged in the Commission Work Programme for 2017 and the report will play a key role in the delivery of this commitment. As you know, President Juncker is a strong supporter of the dairy sector.
In parallel with this work at home, I have been travelling the world to find new markets for our dairy products abroad.
I believe this is vitally important, because as global demand grows, we must be in the strongest possible position to take advantage.
In 2016 I went on a Diplomatic Offensive to intensify and create new trade relationships with third countries. I have visited Mexico, Colombia, Japan, China, Hong Kong, Vietnam and Indonesia – each time bringing a delegation of EU agri-businesses with me. Indeed, Mr Nalet as EDA-President was a prominent participant!
I believe these trade missions go a long way towards finding new openings for our exporters. Conscientious consumers throughout the world recognise the quality and value of our European food traditions.
Export statistics attest to this fact: EU agri-food exports increased by 5.7 per cent in 2015, a welcome dynamic which has a direct impact on job creation, particularly in rural areas. The first 9 months of 2016 confirmed this positive trend, with a new record in EU agri-food exports in September.
Exports reached a record monthly value of almost €11.5 billion exceeding September of previous years by about €500 million. We can build on this positive foundation in the coming months and years. Success abroad means success at home.
In conclusion, ladies and gentlemen, I pledge to work closely with you to do the very best for our dairy sector, today and in the future.
Your professionalism and entrepreneurial spirit make the EU dairy industry the most innovative and advanced in the world.
This means we are in a strong position to take advantage of the growing opportunities the world market brings.
Export markets will play a far more important role in the future, to secure the necessary stability of our domestic market.
You know about my total commitment to support our export industry and I intend to continue deploying our efforts in this area.
As for the internal market, we need market orientation, market balance, competitiveness, and innovation. In this respect, the ball is mainly in your court.
This industry contributes €9 Billion of our current €16 Billion agri-trade surplus – a fact which confirms your importance.
I would like to conclude by reassuring you that the Commission will continue to stand by the sector when required, in an efficient and market oriented manner. Thank you.