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Brussels, 9 October 2009

Milk: Commission adopts latest proposals to support dairy farmers

The European Commission today proposed two changes to the rules governing the dairy sector as part of its continuing efforts to stabilise the milk market. Firstly, and as announced last month by Mariann Fischer Boel, Commissioner for Agriculture and Rural Development, it is proposed that the dairy sector should in future be covered by a disturbance clause which already exists for other farm sectors, to allow a quicker response to future market disturbances. Secondly, for the 2009/2010 and 2010/2011 quota years, changes to the operation of quota buying-up schemes by Member States will ensure that bought up quota which is kept in the national reserve should no longer count as part of the national quota when it comes to deciding whether superlevy is due for exceeding the quota. If superlevy is then collected, the part corresponding to the bought-up quota can be used by Member States for restructuring of the sector. These proposals will be discussed by EU agriculture ministers on 19 October. Later this month, the Commission will formally adopt changes to state aid rules to allow Member States to pay farmers up to €15,000 each in national aid before the end of 2010.

"These proposals show once again our commitment to helping dairy farmers out of the difficult market situation," said Commissioner Fischer Boel. "The wide range of measures we have already taken are having a positive effect and today's proposals will help in the longer-term. Next week also sees the first meeting of the High Level Group on the long-term future of the dairy sector. And on the 19 th, ministers should vote on our plans to extend the intervention period."

Recent developments on the dairy market

The most recent data show that prices are improving not only for all dairy commodities but also for raw milk at the farm gate. The average milk price in July/August is estimated at 25-26 cents/litre and recent information from major European processors suggest a further increase of 1-2 cents for delivery in September/October. Spot prices for milk have increased substantially more since June. Prices for products eligible for intervention (butter and skimmed milk powder) have increased by 7-9% in 3 months and they are now well above the intervention level.

Measures taken previously

The Commission expects to spend up to €600 million on market measures this year. The Commission proposal to extend the intervention period will be voted on by the Council on 19 October. 70 percent of direct payments may this year be paid 6 weeks earlier than usual (from 16 October). As part of the 2003 CAP reform, an additional €5 billion per year was added to the direct payments of dairy farmers to compensate for reductions in intervention prices. Under the Health Check and the Economic Recovery Package, an extra €4.2 billion is available to address 'new challenges', including dairy restructuring. This comes on top of what is already available in Rural Development policy. The Commission has also reinforced the School Milk Programme by extending the range of products and the age groups of children covered by the scheme. It has also opened a new round of promotional measures for dairy products. The Commission is currently preparing a report into the supply chain in the dairy sector, to increase transparency and ascertain whether there are any problems of competition. This will be published before the end of the year and will be discussed by the High Level Group.

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