Farm commissioner Phil Hogan said would increase for the second time how much skim milk powder could be bought up at intervention prices.
The ceiling had been raised to 350,000 tonnes, up from the 218,000t limit which had been hit last month. The commission already doubled this year’s original ceiling of 109,000t in April.
Intervention buying was one of the EU’s last two dairy market tools, which acted as a safety net when commodity prices crashed. Butter and skim milk powder were bought into public stocks at a fixed rate.
The other option was private storage aid, where processors were paid to keep products in store for several months.
Both tactics tried to reduce dairy supplies during a glut.
Speaking to MEPs, Hogan said he had now used all the options in his toolkit. That included the activation of article 222, which let farmer groups work together to cut production.
Private storage aid and intervention had covered 2.8m tonnes of dairy products last year when EU production had risen by 3.5m tonnes.
Ireland’s farming minister Michael Creed welcomed Hogan’s announcement.
“Intervention is a key EU support tool for dairy markets and is badly needed in this extended period of downward price volatility in the dairy sector,” he said.
Copa Cogeca milk working party chairman Mansel Raymond said the European Commission should take more action to help farmers in the short term but did not call for specific measures.
And individual governments should use their full share of the €420m aid package and producer organisations should encourage farmers to take advantage of article 222, by using financial incentives.
“Whilst in the long term prospects are promising, with global demand expected to rise by 2% annually, the short-term situation remains extremely difficult,” Raymond said.
“Actions are consequently needed to address the short-term problems to ensure it’s profitable in the future.”
There are still questions about how effective private storage and intervention are in the long run.
Analysis by Britain’s Agriculture and Horticulture Development Board’s dairy section showed the three countries that produced most milk were not the ones with most product in storage.
Netherlands, Germany and Ireland combined had put only 16% of their extra milk production from 2016 in store. But Belgium had put 86% in and France 68%.
“The challenge for the EU commission is whether there is a better way to support the market than the current intervention system,” the board said.
It called for “Support that encourages and rewards those who are driving a controlled expansion plan, alongside a clear and achievable sales and marketing plan.”
Meanwhile, German dairy farmers are to receive at least €100m from the government in a bid to try to keep them in business.
German agriculture minister Christian Schmidt announced the package after an emergency milk summit.
“We all agreed that on the one hand we need structural improvements but on the other that we need to provide short-term assistance to farmers,” he said.
“The federal government will provide the farmers with a package of €100m plus X. I am in talks with the?finance minister and will talk to Germany’s states and Europe to determine how large the X is.”
It was expected the aid would include loans and tax relief.
Schmidt had hinted in the past that reducing supply was also needed to address the demand-supply imbalance, a move he had been criticised for.
UK Farmers Guardian
