Milk crisis: limit production to save the sector

Met dank overgenomen van Comité van de Regio's (CvdR) i, gepubliceerd op maandag 18 juli 2016.

Local and regional leaders call on European Agriculture Ministers to impose a temporary limit on milk production as a matter of the utmost urgency

With European Ministers for Agriculture due to meet today to discuss the new measures proposed by the European Commission to put an end to the milk crisis, local and regional elected representatives once again call on them to take urgent measures to improve the market and, in the first instance, to regulate milk production volumes.

Local and regional representatives urge European Ministers for Agriculture meeting today at the Council of Ministers in Brussels to supplement the measures to aid cash flow proposed by the European Commission with measures to stabilise the market, to rapidly restore milk to a price that guarantees producers a livelihood and to secure the future of the sector and of livestock-farming regions.

Members of the European Committee of the Regions (CoR) call in particular on Europe's Agriculture Ministers to take urgent measures to limit milk production. The regulation of milk production volumes would have a rapid and positive impact on the incomes of all producers, according to a study presented to the CoR on 27 June 2015.

According to Jacques Blanc (France), mayor of La Canourgue and CoR rapporteur for the opinion on regulating the price volatility of agricultural products: “It seems that the Commission has still not grasped the full extent of the problem and is content to offer minimal assistance to producers and an expansion of public storage, which will have no effect on overproduction. However, we must tackle overproduction, as a recent study by our Committee shows. The future of our regions depends on it  .

The study on the Market Responsibility Programme was presented on 27 June 2015 during a round table on market measures limiting milk production, organised by the European Committee of the Regions’ Commission for Natural Resources. At a time when the dairy industry is experiencing a serious and ongoing crisis, and when the European Commission has failed to provide any response, local and regional leaders, who are committed to saving jobs and the dairy industry as a whole, wanted to assess the feasibility and potential impact of the programme put forward by the European Milk Board, which should be implemented when the milk market is in danger of becoming imbalanced.

The study shows that:

European regulation of production volumes would have a rapid and positive impact on farmgate milk prices. This conclusion calls into question the theory that a decrease in production volumes at the EU level alone might not have an impact on European prices in the context of a global market.

Temporarily capping production volumes would have a very positive impact on the incomes of all European producers. The baseline scenario, with a 6% cut in milk volumes over a year, would see an increase in producers' gross margin of around EUR 6 billion as a result of a 14.6% increase in the milk price and a 38% increase in the gross margin.

The cost of the voluntary reduction programme would amount more or less to the EU budget made available to finance the emergency measures taken in response to the crisis in the agriculture sector, which had a limited impact on producers’ incomes.

Back in April 2015, the Committee of the Regions used its opinion on the future of the dairy industry to warn the European authorities that the dairy market was suffering. The Commission, however, continued to insist that the market would remain favourable in the short to medium term. The Committee of the Regions then called on the Commission to introduce measures to safeguard the producers' incomes and, in particular, to examine the Market Responsibility Programme put forward by the European Milk Board.

Note to journalists

The CoR study Evaluation of the Market Responsibility Programme put forward by the European Milk Board taking 2014 as a test year can be consulted here

Opinion of the European Committee of the Regions on The future of the dairy sector, adopted on 16 April 2015