Dairy decline can be solved by demand and restructuring, not new interventions

Tisková zpráva Press Release Communiqué de presse

Prague, 23 March 2009
 

Dairy decline can be solved by demand and restructuring, not new interventions

The long-term decline in the milk market has been accompanied by an intensive search for instruments that would help EU farmers overcome this difficult period. The latest step is to increase butter intervention purchases – but these instruments have already reached the ceiling. Besides, according to the Commission, the persisting difficulties are no longer caused by overproduction, but by the global economic crisis. Therefore more effort is needed to stimulate demand, restructure the dairy sector and make the relations to commercial chains more transparent.

“Given the situation in the dairy sector, the Presidency has not only been focusing on this area for a long time and keeping in touch with the Commission and the EU Agriculture Ministers, but also, as regards the Council, wants to give the Member States as much room as possible to look for solutions together”, comments Minister Gandalovic.

It is also thanks to the close attention paid by the Czech Presidency to responses to the crisis, which has dealt the dairy sector a particularly heavy blow, that several instruments are already under way. Intervention purchases of milk and butter, which are intended to unburden the market, were launched at the beginning of March. The Commission has now increased the initial amount of 30 thousand tons of butter by an additional 6,700 tons. The tenders will be running until the end of August. Subsidised exports of milk and dairy products to third countries are also expected to improve the situation. The European Commission adopted a decision concerning these exports in January and increased the subsidies in February. However, further increases must be in conformity with intervention rules agreed within the WTO.

At today’s meeting EU Commissioner Mariann Fischer Boel expressed her conviction that the ongoing problems in the milk industry are not caused by current overpressure on the market but by the global economic downturn and decreased availability of loans and bankers’ guarantees for producers of milk. She also clearly refused the possibility of any changes in the ongoing reform of the milk quota system established in 1992. “The current situation on the milk market is not related to the quotas. Low prices are a result of the combination of a drop in demand, especially for products with high added value, and higher competitiveness among the main exporters outside the EU,” stated Fischer Boel who also admitted that a purchasing price of milk in the amount of 20 cents per litre is not sustainable in the long run. The Commissioner is convinced that the measures that have so far been accepted helped put an end to the decrease in prices.

Several Member States suggested for instance to increase the purchasing prices to reach the level of the intervention prices or utilise other regulatory measures, such as processing skimmed milk into casein or utilising it in feed. However, according to Commissioner Fischer Boel such measures would not be effective. 
 

Tereza Dvorácková
Spokeswoman of the Ministry of Agriculture