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SPEECH/ 09/436

Mariann Fischer Boel

Member of the European Commission Responsible for Agriculture and Rural Development

Opening remarks

Figures and graphics available in PDF and WORD PROCESSED

I nformal Agriculture ministers' gathering on milk

Brussels, 5 October 2009

[Dear colleagues],

First of all, thank you to Eskil and the presidency for organising this lunch. I won't hide the fact that I wasn't very enthusiastic about having this meeting because I thought that it would raise too many expectations which this meeting certainly cannot fulfil.

However, once we are gathered here, I'm happy to clarify ideas and proposals which I can formally put on the table at the Council meeting of 19 October, as well as various broader ideas for discussion in the coming months.

As you know, it simply is not possible to make formal proposals today.

The reason is that Commission proposals must be approved by the full Commission: they are not "my" proposals. This approval has to go through a procedure within the Commission. We cannot adopt legal proposals from one day to the next.

A lot of action has already been taken to help the sector, for the short and long term. I won't repeat now all the measures in place, but as you all know, they fill a long list, and the sums involved run into the billions.

The essential point is: the measures are working!

Dairy prices are rising, in the European Union and outside. And I'm not talking about tiny flickers of light in the darkness. I'm talking about clear, significant increases, almost across the board.

We haven't officially received all the data yet, but it looks as though the average European milk price in August was 26 cents per litre, up from 25 cents in July. In September it is expected to be even higher.

On the spot markets, between July and September the raw milk price rose by 12 per cent in Italy, 19 per cent in Northern Ireland and 50 per cent in the Netherlands.

Prices are also improving visibly for butter and skimmed-milk powder.

Of course, prices are very different from one country and region to another. In some areas, they are still too low for some farmers. In other areas, farmers say they are now covering their costs.

So much depends on farmers' cost structure and on the markets into which they sell – for example, whether they are relying on sales of butter and milk powder, or selling higher-value products.

I'm certainly not saying that we've got to where we want to be. But we're definitely heading in the right direction – and this must be said loudly and clearly.

On the other hand, it seems right to take further action to accelerate recovery – and further action is on the way.

As I explained to the European Parliament on 17 September, there are three steps that we can take quickly and for which I will present the formal proposals on the 19 th of October.

First, Member States can be granted the option of paying farmers a state aid of up to € 15 000 under the Temporary Crisis Framework.

Secondly, we could change the rules over certain schemes for buying up milk quota. Bought-up quota would not be counted in calculations of whether a Member State had exceeded its quota in a given year. If superlevy were then collected, the portion corresponding to the bought-up quota could be used for restructuring.

A third step would be to make it possible for the Commission to take rapid temporary action against market disturbance in the dairy sector under Article 186 of the Single Common Market Organisation.

Finally, in this context of short- and medium-term measures, sales out of intervention are becoming an issue of paramount importance. Please take that into account in your requests for the Most Deprived scheme – especially for skimmed milk powder.

For me it is essential that when we sell out of intervention, we do so at the right time and with the right speed, so that we don't hamper the recovery of the dairy markets. Selling out of intervention falls under Commission competence and I will make sure that we use this competence responsibly.

Independently from these short- and medium-term measures, I completely agree that we also need to do some further thinking for the long term, on a number of topics.

This is why, as I have already flagged to the European Parliament, a High-Level Expert Group is being set up. It will be chaired by the Director-General of DG Agri, and will be made up of representatives of Member States. But it is clear that this group also needs to take in the views of the different stakeholders and key players in the dairy sector.

In broad terms, the group will look at possible medium-term and long-term ways of stabilising dairy producers' incomes and improving market transparency.

At this stage, we don't have an exhaustive list of topics in detail. But it's already clear that certain issues will be on the agenda:

It's clear that the group will look at contractual relations between milk producers and dairies - with a view to securing the highest possible returns for milk producers. Price volatility is a harsh reality of globalised markets, but many European milk producers already protect themselves against it intelligently in their commercial relationships.

It's also clear that, more broadly, the group will look at ways of giving milk producers more bargaining power in the supply chain.

Other topics already on the agenda include (among others):

  • our current market instruments;

  • information for consumers (including labelling);

  • innovation and research;

  • the possible usefulness of a dairy futures market; and

  • policy lessons from outside the European Union.

In some European media, there's already been a heated discussion of what this High-Level Group will and won't do.

Let's be clear: the Group is not being set up as a "rapid reaction unit" to find quick solutions to the current weakness in the market.

As I said earlier, we're already taking short-term action, it's already working efficiently, and I'm proposing further steps that could take effect quickly.

The High-Level Group will be looking beyond the current crisis, finding ways of helping the dairy sector to adjust to a world without quotas. Its work will be detailed and thorough so that any solutions proposed will stand the test of time.

Very importantly: it will not prejudge conclusions in the wider debate about what the CAP should look like after 2013.

Some of the topics on the agenda have raised eyebrows. But their presence on the agenda only means that we will examine them – not that we're already committed to a certain course of action.

In terms of analysis, we will follow a number of paths and see where they lead. But if we find that some of them lead into a ditch, of course we won't follow them in practice.

On the other hand, I'm not playing down the importance of this group. The topics for discussion are of vital importance – and most of them are of huge interest to the sector.

I'm just saying that the group will take the time necessary to do a good job. It would be irresponsible of me to promise "quick fixes" that might in fact be ineffective in the short term and damaging in the long term.

The subject of promises brings me to my last point.

The mood in the dairy sector has been at fever pitch in some Member States (though certainly not in all). This is not a good environment for making the right decisions.

Good policy-making must be based on a clear and objective understanding of what the situation really is, what action is being taken, and what further action can realistically be taken. Misunderstanding could become the mother of serious mistakes.

I hope I can rely on all of you to keep giving the sector and the public a clear understanding of the situation in your respective countries.

And now, to help today's discussion along, I would like to distribute a one-page summary of the High-Level Group's agenda and working arrangements as they currently stand.

Before I turn off my microphone, let me say a last word on information I got during my visit to Chile last week.

When I met with the Foreign Minister of Chile he told me that during a top-level meeting (Heads of State and Foreign Ministers) between Africa and Latin America in Venezuela, pictures were projected onto a large screen showing European farmers pouring out millions of litres of milk into the fields.

Apparently, these images immediately blew up Europe's reputation in the developing world like a tonne of dynamite. That was the instant feeling in the room. The common view was that in times when hunger is still an increasing problem worldwide, European farmer are destroying foodstuffs on a large scale just to receive more subsidies.

This is the image and the message we are sending out to the world!

It is our common responsibility to correct this image and to reassure our trading partners in the world, especially the developing countries, that Europe is not doing a U-turn in its Common Agricultural Policy.

Thank you.

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