EU moves to support dairy market

16 January 2009

In mid-January, the European Commission announced a series of measures to help support the dairy market. As a result, export rebates have been reinstated for butter, cheese and powdered milk (full-fat and skimmed). And in March, the Commission will apply the system of intervention purchases to butter and low-fat milk powder.

‘The collapse of the milk price in recent months has taken many people completely by surprise,’ says the EU’s Agriculture and Rural Development Commissioner Mariann Fischer Boel. ‘The European Union should not delay any longer in coming to the aid of producers. I am convinced that these measures will help the dairy market to stabilise itself.’  Following the price rises for milk and dairy in 2007 and early 2008, the situation on the dairy market has now undergone a complete turnaround. Increased global supply combined with falling demand on the European market has sent dairy prices plummeting, sometimes to below the intervention price. According to Fischer Boel, the end of these price slumps is not yet in sight.

The intervention measures for butter and low-fat milk powder will apply from 1 March to the end of August. The European Commission will purchase the first 30,000 tonnes of butter and 109,000 tonnes of low-fat powdered milk at the intervention price. However, the expectation is that the butter quota will soon be used up and that further support will be necessary.

Mrs Fischer Boel also believes the time is right to breathe new life into the export rebate. These were dismantled due to the high ongoing price of dairy produce on the global market. Now the sharp decline in these prices has severely eroded the competitiveness of European exporters on markets outside Europe. These problems have been further aggravated by the current financial crisis.

The European Commission believes that the measures it has taken will show dairy farmers and the dairy industry that it is prepared to use all the means at its disposal to support both the market and the incomes of the farmers supplying it.