1 Measures to stabilise
the dairy market
| (31002)
14270/09
COM(09) 539
| Draft Council Regulation amending Regulation (EC) No. 1234/2007 establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products ("Single CMO" Regulation)
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| Legal base | Article 37EC; consultation; QMV
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| Document originated | 9 October 2009
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| Deposited in Parliament | 14 October 2009
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| Department | Environment, Food and Rural Affairs
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| Basis of consideration | EM of 29 October 2009
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| Previous Committee Report | None, but see footnotes 1 and 2
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| To be discussed in Council | See para 1.9 below
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| Committee's assessment | Politically important
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| Committee's decision | For debate in European Committee A (together with the debate already recommended on a Communication on the dairy market situation)
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Background
1.1 Since 2007, milk prices have dropped significantly, and the
Commission was invited by the European
Council in June 2009 to present an in-depth analysis, including
possible options for stabilising the market.
1.2 As we first noted in our Report of 14 October
2009, it accordingly put forward in July 2009 two documents, one
being a Communication,[1]
describing the reform process, providing an analysis of the market
situation, summarising Community support measures, and outlining
options for further action and discussion, whilst the other was
a draft Council Regulation,[2]
which sought to give effect to one of the measures identified
in the Communication (to extend the period within which intervention
buying may take place). In that Report, we also noted that some
of the measures proposed in the Communication had already been
agreed in Management Committees, but that an initial discussion
on other possible measures was due to take place at the Agriculture
Council on 7 September. We therefore decided on 10 September to
await the outcome of that meeting before reporting these documents
to the House.
1.3 We were subsequently told that there had been
a substantial discussion, with all Member States sharing the Commission's
analysis, and many (led by France and Germany) wishing to see
more done to provide support, but with the UK and some other Member
States urging caution. However, as we understood that further
discussion was due to take place at the Council on 19-20 October,
we decided to draw the documents to the attention of the House,
but to hold them under scrutiny, pending further information.
1.4 As we noted in our Report of 28 October 2009,
we next received a letter from the Minister of State for Food,
Farming and Environment at the Department for Environment, Food
and Rural Affairs (Jim Fitzpatrick), which said that the proposal
on intervention had been formally adopted, and that, as regards
the dairy market situation, the Commission had told Member States
that it had raised several ideas with the European Parliament
for tackling the immediate situation. In addition, it had proposed
the creation of a High Level Group to discuss medium term options.
1.5 The Minister added that the Council on 19 October
had considered a note by 21 Member States calling for various
immediate steps including a further use of market measures, an
extension of products available under the school milk scheme,
caution in selling intervention stocks, and the establishment
of a new €300 million milk fund, and that, although other
Member States had queried the relevance of these proposals, the
Commission had indicated a willingness to propose a new €280
million fund for the dairy sector in 2010. He added that there
had also been a full discussion of a new Commission proposal amending
Article 186 of the Single Common Market Organisation (CMO) Regulation
1234/2007,[3] and providing
new flexibilities as regards the super levy.
1.6 We concluded that, whilst we would wish to consider
the Explanatory Memorandum the Government was due to provide on
these new proposals, it seemed to us in any case that last summer's
Communication raised a number of important issues in relation
to the underlying situation in the dairy sector, and the measures
(and funding) available to tackle them, which the House should
consider further. We therefore recommended that document for debate
in European Committee A.
The current proposal
1.7 The new Commission proposal referred to above
is set out in the current document, and, as indicated, has two
elements. The first relates to the super levy, which is payable
if a Member State exceeds its quota. At present, a Member State
can "buy" quota from its farmers, and put this into
a national reserve for reallocation as necessary, and that reserve
counts as part of its total quota for determining whether super
levy is payable. The change now proposed would exclude temporarily
any bought-up quota in the national reserve from that calculation,
thus reducing the level of production at which the super levy
would become payable, and the sum raised by the purchase of any
such quota could then be used by the Member State to finance restructuring
measures in its dairy sector. The second element relates to Article
186 of Council Regulation No. 1234/2007, which allows the Commission
to take measures needed when the Community market is likely to
be disturbed by significant price changes for certain commodities:
this proposal would extend the provisions in question to include
dairy products.
The Government's view
1.8 In his Explanatory Memorandum of 29 October 2009,
the Minister says the Government supports the proposal on quota,
although it has no plans to use it in the UK, but that it has
concerns over the proposed use of Article 186 of Council Regulation
No. 1234/2007. In particular, it is unsure how the Commission
intends to use these powers, and is unconvinced that they are
necessary, given the steps taken in the summer to extend intervention
under existing provisions. It is also concerned about the budgetary
implications if these new powers were to be used to activate emergency
measures having significant implications for Community and national
budgets.
1.9 The Minister adds that the proposal will be discussed
by senior officials in Brussels on 9 November, and that it is
hoped it will be adopted as an A point (ie. without discussion)
at the Council next month.
Conclusion
1.10 These proposals were foreshadowed in our
Report of 28 October on the Commission's Communication on the
dairy market situation, and clearly stem from the various discussions
which the Council has had on the measures needed to stabilise
that market within the Community. In view of this, it would be
logical if they were to be considered by the House at the same
time as that Communication, and we are therefore recommending
that this document should be debated in European Committee A alongside
it.
1 (30825) 12289/09: see HC 19-xxvii (2008-09), chapter
6 (14 October 2009) and HC 19-xxix (2008-09), chapter 1 (28 October
2009). Back
2
(30790) 11905/09: see HC 19-xxvii (2008-09), chapter 6 (14 October
2009) and HC 19-xxix (2008-09), chapter 1 (28 October 2009). Back
3
OJ No. L 299, 16.11.07, p.1. Back
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