Skimmed milk powder: public intervention by tendering continues in 2019 - EU monitor

EU monitor
Zaterdag 19 september 2020

Skimmed milk powder: public intervention by tendering continues in 2019

Met dank overgenomen van Raad van de Europese Unie (Raad) i, gepubliceerd op maandag 15 oktober 2018.

On 15 October 2018 the Council decided to confirm in 2019 the rules already adopted at the beginning of the year and set at zero tonnes the quantitative limitation for buying-in skimmed milk powder (SMP) at a fixed price.

The so-called Fixing regulation, which determines measures on fixing certain aids and refunds related to the common market organisation of the markets in agricultural products, sets a ceiling of 109 000 tonnes under which skimmed milk powder has to be bought in at a fixed price (169.8 €/100 kg) during the public intervention period, which runs from 1 March to 30 September. Once that ceiling is reached, public intervention continues, though under a tendering procedure, until the end of the intervention period.

By setting the ceiling to zero for the next period the Council is therefore allowing public intervention to be activated only through tendering. This decision will enable the EU to take better account of the market situation when deciding on a case-by-case basis what volumes of SMP should be bought in by the EU and at what buying-in price.

Background and next steps

As a consequence of the difficult situation in the dairy markets, public intervention stocks of SMP in the EU rose to almost 400 000 tonnes in 2017, thereby risking severe pressure on the market, with a negative impact on dairy prices. In 2018, EU market prices for skimmed milk powder have remained on average some 19% below the public intervention level, whilst butter prices have been 117% above the public intervention level, thereby widening the fat-protein price gap.

Against this background and in order to avoid market disruption, the Council already decided to forego the automatic buying-in of SMP in January 2018.

The Common Market Organisation (CMO) is a set of rules which regulate agricultural markets in the European Union. This includes setting the parameters for intervening on agricultural markets through market support instruments (e.g. public intervention and private storage, emergency measures) and sector-specific support.

The adopted regulation will enter into force on the day following its publication.

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