Who will finance new measures for EU farmers to cut milk production?

The European Commission this week announced that it will allow the voluntary supply management of milk during periods of price downturns.

The controversial move means the EU Member States now have the option to pay its farmers to reduce their milk production levels as dairy markets across the globe continue to spiral downwards.

It comes following significant lobbying from a host of Member States with France the most prominent nation to call for the measure.

This week the European Commission invoked Article 222 which contained under the Common Organisation of the Markets Regulation, a cornerstone of the Common Agricultural Policy.

Article 222 states that “during periods of severe imbalance in markets”, EU completion law will not apply to agreements and decisions between recognised producer organisations or interbranch organisations.

The measures are applicable for an initial period of 6 months, subject to renewal if necessary and the full rules to be defined over the coming weeks.

Financing Supply management

It is understood that no new EU money will be used to finance the measure, including dipping into the €400m Crisis Reserve.

Member States planning to use the measures are instead being told that they could use their unused share of the €420 million targeted aid and national paid top-ups agreed by the Commission in September last year.

Member States will also now be able to use the amended increased state aid rules agreed in Europe this week to compensate dairy farmers who reduce supply.

However, the fear from an Irish perspective is that those in favour of supply management will now try to extend its limited remit, as dairy markets show no immediate or medium-term level of improvement.

Currently, no new EU money going towards funding the scheme but concerns remain that the pressure to use EU monies will come on from countries using the measure.

Ireland opposed to EU funding of supply measures

Speaking following this week’s Council meeting in Brussels, Minister for Agriculture, Simon Coveney said he remains concerned about the references to supply control in the presidency conclusions.

However, he stressed that the measures proposed are voluntary, agreed at the level of the first purchaser of the milk and are strictly temporary in nature.

“They do not constitute a return to quotas and both the Commission and the Presidency were crystal clear on this point.

“I am also opposed to allocating new EU funding to incentivise such reductions,” he said.