Legislative package for EU dairy sector planned for 2010

At the “What future for milk?” conference in Brussels this week, Commissioner Dacian Ciolos ruled out a return to quotas but said he hopes to propose regulatory changes this year to tackle price volatility.

Speaking at the conference, Ciolos said he would wait for the recommendations of the High Level Group on milk in June before sitting down with the intention of presenting a package of legislative measures by the end of the year.

Replying to questions about the nature of these proposals, Ciolos said “Nothing is excluded for the moment. However, it will not be budgetary measures but regulatory measures.”​

The Commissioner said new mechanisms are needed to fight extreme price volatility without upsetting the natural evolution of markets. He added that there is no place for quotas as a solution for the dairy sector beyond 2015.

Supply chain ​

In his overview of the Brussels conference, Jean-Luc Demarty, who heads up the High Level Group on milk emphasized the need for measures to tackle supply chain imbalances.

The Commission official said: “It is evident that a more transparent and more equal sharing of the added value between the market players will have to be considered.”​

In relation to contractual relationships between producers and processors, Demarty said the discussions at the conference had confirmed the importance of the principles of contracts.

Demarty also said that enhanced negotiation power for farmers at a collective level is necessary. Solutions, he said, point to possible exceptions to competition law for the dairy sector and reinforcement of producer organisations.

Price volatility ​

To prevent a repeat of the milk price crash in 2009, Demarty said faster adaption of raw milk supply to demand has to be organised and market measures also have a role to play as a safety net. On this second point, he said futures may be useful as a complementary risk management tool.

As for milk prices today, the Commission has just released its quarterly report on the dairy market.

The overall price situation improved significantly in the second half of 2009 but the report said that since December EU and Oceanic prices have weakened slightly. Now prices appear to be stabilising for butter and showing some signs of recovery for milk powder.