Milk policy in the EU – a case of policy incoherence

While milk producers in the EU struggle with low milk prices, the EU and its member states struggle to come up with a coherent policy to address the issue. Milk prices will not recover until there is a better balance between supply and demand. I have previously written a number of posts (here and here) in which I have described the policy responses introduced in response to the sharp fall in milk prices since their record high in early 2014.

These responses include measures designed to reduce supply. Specifically, the Commission has activated Article 222 of the CMO Regulation which suspends competition law in the case of producer organisations, co-operatives and inter-branch organisations and allows them to voluntarily limit supply with a view to raising the price of milk.… Read the rest

Two steps forward, one step back: coupled payments in the CAP

One of the success stories in the evolution of CAP reform has been the change from supporting the product to supporting the producer by moving, first, from market price support to coupled payments, and then by decoupling these payments.
The 2013 CAP reform has reversed this process. Coupled aids have started to grow again, from a projected €2.7 billion in 2014 to a projected €4.8 billion in 2015, an increase of nearly 75%. Their share of total direct payments will rise from 6.7% in 2014 to 11.6% in 2015. This step backwards was one of the negative outcomes of the recent CAP reform.… Read the rest