Challenges and opportunities for the dairy sector with the reformed CAP

1
EDA World Dairy Forum

• Challenges and opportunities for the dairy sector
  with the reformed CAP
• Bratislava, 9 October 2009
• Herman Versteijlen
• Director Agricultural Markets
• European Commission

2

• Turbulent times in the dairy sector, what has the
  Commission done ?
• How did the market react at the beginning of 2009
  ?
• Future absence of quota changes role of dairies

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Turbulent times in the dairy sector, what has the
Commission done ?

• After many years of relatively modest price
  volatility, a very brutal one occurred in 2007
  and 2008.
• Quantities of milk produced in EU 27 are the
  same
• 137 840 thousand tonnes in 2007/2008
• 137 850 thousand tonnes in 2008/2009.
• Changes in demand caused volatility (financial,
  economic crisis)
• The 2003 reform foresees a lower safety net
  support level in return for decoupled direct
  payments.

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Turbulent times in the dairy sector, what has the
Commission done ?

• Safety net support applied 600 Million Euro
  Expenditure on 12 months basis
• Advance private storage butter from 1 March to 1
  January (134 000 tonnes)
• Extension storage period from 15 August 2009
  to 28 March 2010
• Re-activation of export refunds from 1 January
  2009
• Removal minimum export price cheese from 16
  August
• Intervention buying of butter and SMP beyond
  limits (resp. 83 222 tonnes and 282 485 tonnes)
• Extension of intervention period beyond August
• Extension scope of school milk programme
• Special milk promotion programme
• Advance direct payment to farmers (70 from 16
  October)

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Turbulent times in the dairy sector, what has the
Commission done ?

• Proposals to Council/Parliament
• Increase state aid possibilities from 7 500
  to 15 000 Euros for undertaking
• Include milk and milk products in the scope of
  article 186 to allow Commission to act in case of
  disturbances
• Allow member states not to use bought up
  quantities in the reserve to compensate producers
  that exceeded individual quota
• PM rural development extension of financial
  envelope economic recovery package to dairy

6

• Turbulent times in the dairy sector, what has the
  Commission done ?
• How did the market react at the beginning of 2009
  ?
• Future absence of quota changes role of dairies

7
How did the market react at the beginning of 2009
?
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How did the market react at the beginning of 2009
?
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How did the market react at the beginning of 2009
?
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How did the market react at the beginning of 2009
?
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How did the market react at the beginning of 2009
?

• Quota use 2008/2009
• (EU 4.2 below quota)

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How did the market react at the beginning of 2009
?
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How did the market react at the beginning of 2009
?
EU Cumulate deliveries since April (in compared
to 1 year before) and Milk Price
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How did the market react at the beginning of 2009
?
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• Turbulent times in the dairy sector, what has the
  Commission done ?
• How did the market react at the beginning of 2009
  ?
• Future absence of quota changes role of dairies

16
Future absence of quota changes role of dairies

• Whole sector suffers of violent price volatility
• Avoid market oversupply during low price low
  demand period
• Improve contractual relations between dairies and
  milk producers
• Improve market transparency

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Future absence of quota changes role of dairies

• Constitution of high level expert group
• Contractual relations between milk producers and
  dairies to better balance supply and demand on
  the dairy market
• What can be done to strengthen the bargaining
  power of milk producers ?
• Are the existing market instruments appropriate ?
• Transparency for the benefit of milk producers,
  dairy industry and consumers
• Information on market and products (quality,
  health and labelling issues)
• Innovation and research with a view to render the
  sector more competitive
• A futures market in dairy ?
• Experience of systems in place in countries
  outside the EU