Brussels has effectively run out of tools to help support the dairy market, EU farm commissioner Phil Hogan has warned.
Total private storage aid and public intervention had covered 2.8m tonnes of dairy products last year – at a time when EU production increased by 3.5m tonnes, he told a special meeting of MEPs.
In a bid to help producers, Brussels since announced a range of measures, he said, including an income aid package and measures to take milk off the market.
“We have now effectively deployed all of the tools available in the CAP toolkit,” he admitted.
Controversially, these measures included giving producers permission to get together and agree to curtail milk output – something which would usually breach EU competition rules.
Mr Hogan believed such a measure – known as activating Article 222 – could help rebalance the market.
But industry leaders in countries such as the UK argue that any reduction in dairy output would simply be offset by farmers increasing production elsewhere.
Mr Hogan said: “This is a voluntary instrument and its use depends ultimately on producers and is now genuinely in the hands of dairy farmers who may, if they so wish, join forces and collectively decide to reduce production.”
MEPs attending the debate urged the commissioner to go further. They called for an EU-wide lid on milk production to boost prices, a more efficient intervention system, and fairer balance along the supply chain.
They insisted that the current milk crisis was caused by the Russian embargo on foodstuffs, the end of milk quotas and a drop in global demand, all of which justified an EU solution.
Mansel Raymond, dairy chairman of the EU farm umbrella organisation Copa Cogeca, agreed more action was needed to address the sector’s short-term problems.
Mr Raymond said he was disappointed that EU member states had paid out only about half the aid made available by Brussels under the first EU crisis package.
Article 222 was not being used because there were no financial incentives for it, suggested Mr Raymond.
Delays in direct payments were also causing problems for farmers.
“Possible EU financing should not affect the crisis reserve,” said Mr Raymond. “Producers need their fair share of the margins through the food supply chain.”
With little sign of prospects improving, Mr Hogan said the commission would again increase the amount of skimmed milk powder taken off the dairy market (see Business, p18).