Agriculture commissioner Mariann Fischer Boel said that the shift back towards more subsidised dairy production had been made unavoidable due to general industry surprise at rapidly falling milk prices.
Measures such as export refunds were removed back in June 2007 as part of reforms to the common agricultural policy (CAP) to eventually cut out subsidies, due to the high prices being paid for milk and dairy products at the time.
Just last year, commissioner Fischer Boel suggested that measures like the refunds had perhaps served their purpose in the drive to market deregulation for dairy, though falling prices have led to a change in current policy.
Fischer Boel said that the despite a shift away from support measures following reviews like the CAP Health check, the decision to reintroduce exports refunds for butter, cheese, whole and skimmer milk powders as a vital short-term intervention.
“Measures introduced in the Health Check will give the dairy sector an important boost, but we need to do something now because the Health Check will only apply from next season,” she stated.
Before their removal back in 2007, export refunds had been used non-stop since 1968 in order to try and keep European dairy products competitive with rival international markets.
Fischer Boel said that the reinstatement of the refunds was occurring at a time when the overall world market price for milk was below EU intervention levels and general market prices. She claimed that exporters from the bloc were struggling in the current market.
“This situation is aggravated by the already existing difficulties for our exporters as a result of the financial/credit crisis,” stated Fischer Boel. “Export refunds will be activated not only for butter and skimmed milk powder but also for all other dairy products eligible in the past, mainly whole milk powder and cheese.”
By working under its obligations under the World Trade Organization (WTO), Fischer Boel said the Commission would work to support both milk farmers and the dairy market where possible.
The commissioner said that in terms of intervention, the purchasing of butters and skimmed milk would resume from 1 March until the final days of August, though may be extended if required by the market.
“The first 30,000 tonnes of butter and 109,000 tonnes of skimmed milk powder will be bought in at a pre-determined price (intervention price),” she stated. “We expect that this quantity of butter will be taken quite quickly and consequently it will be necessary to support the market beyond this limit.”