According to the EDA, the adoption of an intervention purchasing system - where excess raw milk would be purchased by an intervention agency to stabilise prices - would be a “more effective” way of addressing milk price volatility than milk supply management – a tool currently being favoured by MEPs.
Earlier this year, the European Parliament agreed on a mandate for negotiations on amendments to the Common Agricultural Policy (CAP). Among its decisions was one to support the introduction of a milk supply management system in times of crisis.
In a ‘time of crisis’ the system would require milk suppliers who had increased their production levels to pay a penalty, while aid would be paid to those who had reduced production.
This position is now the basis for trilogue negotiations between European Parliament, European Council, and European Commission (EC) representatives, who are working to reach an agreement on the CAP Reform.
Dairy industry "in favour of" intervention system
According to the EDA, which represents the interests of dairy processors in the European Union (EU), the industry favours an intervention purchasing system as an alternative to any form of supply management.
“The European dairy industry is not in favour of such measures for a number of reasons: first of all, it will not result in the desired price effect and second, it would primarily assist other, non-European, countries to profit from the growth in world market demand,” said a statement issued by the EDA.
“This safety net should primarily operate through an intervention purchasing system, which has already proved itself to be effective and cost neutral to the EU budget in the past.”
The EU has previously employed intervention purchasing systems to maintain butter and milk powder prices in the region.
“EDA urges therefore the negotiators in the trilogue to make the appropriate modifications to the safety net to make this a viable measure against extreme volatility," the EDA statement added.
Supply management a "step backwards"
The EDA has previously voiced “serious concerns” about the proposed adoption of supply management in times of crisis by the EU in the dairy sector.
Speaking with DairyReporter.com in January 2013, EDA secretary general, Dr Joop Kleibeuker, said that implementing any form of supply management would be a “step backwards” for the industry.