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Milk: Agriculture MEPs want to better equip dairy farmers to face current challenges

09-06-2015

EU must bring more balance into the supply chain, introduce better tools against market disturbances and help farmers find new outlets for their produce, says the agriculture committee in a draft non-binding resolution adopted Monday night. To ensure viable, sustainable and a competitive dairy sector across the EU for all - including small farmers and producers in disadvantaged areas - member states must also make better use of tools from the so-called Milk Package.

This is crucial time for the EU's dairy sector. The end of quotas has been part of a longer-term shift towards a more market-oriented policy. The sector has had to face up to new challenges – globally, there remains little appetite for our exports in China at the moment, and there is no end to the Russian embargo in sight. On the farm, those who are looking to expand production will have to do so sustainably and invest wisely. But the greatest single challenge facing our dairy farmers is price volatility. And it is here to stay for the foreseeable future", says rapporteur of the draft resolution James Nicholson (ECR, UK), who also steered the Milk Package through the Parliament in 2012.

"We need to become global leaders and not global followers in Europe – no longer should we be in a situation where we are constantly looking over our shoulder at what New Zealand and the US are doing. While there are risks and uncertainties, there are also many opportunities for the dairy sector if we are willing to embrace them. We can start by using the tools we have but using them better", he adds.

Major challenge: Volatile markets

The high degree of price volatility and recurring crises makes major investments in livestock and the installation of new producers very difficult. This is the main challenge facing the dairy sector, says the committee. And yet the Commission's capacity to respond rapidly and effectively to market crisis seems to be limited, MEPs say. Existing 'safety net' measures such as public intervention and private storage aid alone are neither sufficient enough nor up-to-date to address current challenges in the milk sector, they say.

MEPs therefore urge the Commission to use new targeted market measures to address the crisis resulting from downwards price pressure, a dip in global demand, price volatility and impacts of Russian embargo on EU food products. The EU should develop more responsive and realistic crisis instruments and possibly use risk management instruments to take advantage of the volatility in the sector to increase its competitiveness, says the adopted text. The dairy sector should also get engaged in developing further insurance tools when the market is strong in order to curb milk price volatility ensure proper income for dairy farmers.

Agriculture MEPs also demand mechanisms that would effectively protect farmers from abuses in the retail market and call on the Commission to come up with a proposal to do away with unfair trading practices as soon as possible.

Better monitoring of milk market

To tackle imbalances and crises on the milk market, the Commission must monitor more closely its functioning and come up with ideas to better mitigate related risks, MEPs say. They welcome the establishment of the Milk Market Observatory (MMO) but urge the Commission to ensure that the MMO will be able produce accurate data in real time, send earlier and more frequent crisis warnings, and recommend necessary actions. MEPs also urge the Commission to closely monitor the evolution of dairy production and to assess the economic impact of the end of quotas on dairy farms.

MEPs to member states: Use Milk Package to strengthen dairy farmers across the EU

The so-called Milk Package, which allowed member states to introduce compulsory contracts to help farmers and processors plan their production volumes and to bolster the structuring of supply chains in view of the end of milk quotas, "is indispensable to keep dairy farms as viable and competitive businesses in all of the territories of the Union", Agriculture MEPs say. And yet, even though its implementation is in an early stage, the results so far are disappointingly low, they add.

The Agriculture committee therefore calls for stronger rules for recognition of producer organisations (POs) to increase the influence of milk farmers in the negotiation of contracts. EU and member states should also better explain to farmers advantages of POs in tackling imbalances in the supply chain and provide additional incentives to encourage farmers to join them or set up new ones, MEPs say. Strengthening contractual relations by extending compulsory contract on milk delivery to the entire sector and to all EU member states would also contribute to equitable distribution of earning along the supply chain, they add.

The Commission should also come up with an in-depth study on ways to ensure an optimal use of tools made available to the Member States, say MEPs.

More funds to outermost regions

Milk production must be maintained all across the EU, including in disadvantaged, mountainous, insular and outermost regions, the committee insists. To this end, MEPs want to adapt the support for setting up and functioning of POs to realities on the ground and call for more funds and a transition mechanism to help farmers in outermost regions adapt to the new post-quotas reality.

Encourage expansion to new markets but stabilise the internal one too

As the global dairy demand is predicted to grow by 2% per annum, the EU dairy policy after the abolition of milk quotas must include means of making the most of expansion opportunities and strengthen EU farmers' competitiveness, says the adopted text.

To this end, the MMO should provide closer insight in development of international markets in order to identify any trends and seize export opportunities and the Commission should get more engaged in opening new markets for EU milk farmer in third countries and removing trade barriers, MEPs insist.

Securing diverse export markets for EU products is essential also in view of recent Russian ban, MEPs say but they insist that it must be combined with ensuring a stable and solvent domestic market. They also call on the Commission to protect EU's geographical indications when negotiating bilateral trade deals, they add.

Next steps

The draft resolution as adopted by the Agriculture committee will be scrutinised by the Parliament as a whole during the July plenary session in Strasbourg.

Type of document: Draft non-legislative resolution (own-initiative report)

Monday, 8 June 2015

In the chair: Czesław Adam SIEKIERSKI (EPP, PL)

Committee on Agriculture and Rural Development

Draft report and tabled amendments (point no. 4)Profile of rapporteur James Nicholson (ECR, UK)Procedure fileParliament secures more bargaining power for dairy farmers - press release after the EP vote on Milk Package (15.02.2012)Committee on Agriculture and Rural Development