Dairy sector measures do not set pulses racing

4000 dairy farmers with 900 tractors demonstrated outside an EU agricultural ministers meeting in Luxembourg yesterday calling for more aid for the sector. Inside, ministers faced a Franco-German memorandum backed by 20 member states with a series of demands for market distorting measures. In the event the concessions the Commission made are probably the least they could have got away with in the circumstances. Farmers’ organisation COPA immediately condemned them as insufficient.

The main move was to make an additional €280m of public money available under the Article 186 ‘disturbance clause’ which allows the Commission to step in at short notice when the market collapses. The milk market has hardly collapsed and this is something EU finance ministers may wish to consider when they meet to consider the approval of the move on 19 November.

What the money is to be spent on is yet to be decided, although private storage for cheese has been mentioned. No, this doesn’t mean that members of the public can get a subsidy for filling their fridges with cheese, although anything is possible in the Alice Through the Looking Glass world of the CAP.

What is significant is what was in the Franco-German document that has not been acted upon: official intervention buying of chesse, additional funding for school milk schemes (funding for fruit yoghurt had already been agreed) and more targeted export assistance and subsidies for skimmed milk powder to be used in animal feed.

It was this last measure which had the greatest potential for damage. Commissioner Fischer Boel dismissed it by saying that she had not received any convincing evidence that it would increase demand. What it has done in the past is seriously distort other markets, e.g., for pigmeat.

The notion of freezing quotas had already been knocked off the agenda in September, a singularly ill thought out proposal which would have done nothing in the short run and delayed adjustment in the longer run.

It is worth noting that milk prices have been increasing, by 2 per cent in August while butter has gone up by 4 per cent in France, 8 per cent in Germany and even more in the UL. Intervention buying of skimmed milk powder has virtually come to a halt because the market price is higher that the intervention price.

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