To recall, the Commission has proposed, before summer, a draft Council Regulation extending intervention periods for butter and skimmed milk powder until 28 February 2010. Despite UK opposition, the Agriculture Council, on 19 October, adopted without debate the European Commission’s proposal hence the 2009 intervention period for butter and skimmed milk powder was extended from 31 August 2009 until 28 February 2010.
Moreover, the Commission is set to extend state aid to dairy farmers with liquidity problems. It intends to modify the Temporary Crisis Framework for state aid measures in order to allow Member States to pay up to €15,000 per farmer until the end of 2010. The Commission will therefore raise the national aid ceiling from €7,500 to €15,000.
The Commission has also proposed other measures such as extending the “disturbance clause” to dairy sector, which would allow quicker intervention to future market disturbances. This means that the Commission would have more powers to take measures to tackle dairy market disturbances, if prices fall or rise as it already has in other farm sectors. The European Parliament endorsed the Commission’s proposals and the Council is likely to adopt them in November.
Nevertheless, the majority of the EU Member States believe that the measures proposed are insufficient. Last September, 14 Member States supported the French and Germany initiative and submitted a joint statement to the Agriculture Council on Situation on the European dairy market where they stressed that the existing measures are not enough to improve the situation of the dairy farmers. They called for “substantial measures” “accompanied with the necessary EU-budgetary means.”
In the meantime, French Agriculture Minister Bruno Le Maire traveled around Europe in order to gather more support for the Franco-German initiative. Due to his persistence, 21 Member Sates are now backing the joint declaration. There is therefore a qualified majority at the Council for this joint declaration. Hence, 21 Member Sates including Austria, Belgium, Bulgaria, Czech Republic, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Poland, Portugal, Romania, Slovakia, Slovenia and Spain submitted to the Agriculture Council of 19 and 20 October, a joint contribution on the situation on the European dairy market. They called upon the European Commission to present a proposal for a temporary increase in the intervention prices and to increase export refunds for butter, milk powder and cheese as well as to reactivate the temporary suspended aid for the usage of skim milk and skim milk powder in feeding stuffs. Moreover, they urged the Commission to propose an additional €300 million to aid dairy farmers.
According to the EUobserver, Sieta van Keimpema, vice-president of the European Milk Board (EMB), said that they are not calling for more subsidies but "flexible production regulation." She said "Flexible production controls represent no extra burden to the taxpayer and can be an effective way of creating milk prices which are fair both to producers and consumers.”
The Commission has pointed out that market measures such as intervention, private storage aid and export refunds have already cost around €350 million but the Commission is expecting to spend an extra €600 million. The Commission has stressed that “The Preliminary Draft Budget for 2010 leaves a theoretical margin of manoeuvre of EUR 1 000 million for market measures and direct aids but EUR 300 million of this amount must, in line with sound budgetary management, be kept under the sub-ceiling.” Hence, according to the Commission, the possibility of funding new measures in the dairy sector in budget year 2010 is very limited.
Nevertheless, the Commission has yielded to the pressure from the abovementioned Member States and milk farmers and announced on 19 October that it will propose to allocate an extra EUR 280 million, from the 2010 budget, to support the dairy farmers. The Commission will put forward an amending letter to its preliminary draft 2010 budget. Such funds would be allocated among the member states according to their milk production having the national quotas as the limit. Germany and France are likely to get 20% and 17%, respectively, of the total.
According to Marianne Fisher Bold there would be no money left for other agricultural sectors in case of an emergency. She said “It is out of the question for any member state to come asking for additional aid, because we have no more money.”
This proposal must be approved by the budgetary authority, the Council and the European Parliament, within the framework of the 2010 budget negotiations. On 22 October, the European Parliament voted at first reading on the draft 2010 budget and approved the creation of a €300 million dairy fund to deal with the milk crisis. The Commission has proposed the amount of €280 million but it is important to recall that 21 Member States have also demanded €300 million. The UK as well as Netherlands is against the creation of such fund.
In fact, Jim Fitzpatrick has said "We want to see a viable and competitive dairy sector in Europe, but will not support anything that takes us backwards to a regime of heavy market support for inefficient dairy producers at the expense of taxpayers and consumers." However, the majority of the EU member states do not share the UK’s views. As Bill Cash said “This new top-up simply means that Brussels wants to continue the old regime of subsidies, which is not in anyone’s interest in the United Kingdom.”
