This programme had a budget of €150 million for a targeted reduction of 1.07 million tonnes.
And Poland clearly recognised the importance of this scheme: 3400 Polish dairy farmers participated, for a total national package of €5.2 million.
The combination of all these actions has had a clear positive effect: the EU Milk Market Observatory’s latest estimate for the average milk price in Europe shows that things are moving in the right direction.
Average EU farm gate milk prices reached 35.1 c/kg in August 2017, 9% higher than the last 5 years’ average.
EU cow’s milk collection increased by 1.7% in July 2017 compared to the same month last year, which resulted in 219, 000 additional tonnes of milk – much of it here in Poland.
Dairy market today: the particular case of SMP stocks
After butter prices reached historical levels, scoring a new record week after week, they now appear to be easing down. Nobody knows where the trend will end but there are surely reasons to believe that increased demand for butter is a structural phenomenon.
On the skimmed milk powder front, the story is different. Significant stocks have been accumulated during the crisis years (2015 and 2016) and, while public intervention had an undeniable market stabilisation impact, the very existence of those public stocks is weighing on the market.
The real challenge is to find a customer at a price that does not disturb the market. I count on you for that, in particular because an important share of this powder is stored in Poland: 10%.
The other priority is to avoid new buying-in under public intervention next year, without due market justification.
In recent weeks, we have seen a rush to sell SMP into intervention, even though market conditions didn’t justify it.
For the last week of September alone, more than 11 500 tonnes have been offered to public intervention.
If nothing is done, from March next year, we will be obliged to buy SMP at a fixed price within the ceiling of 109 000 tonnes.
I am of the view that buying-in should only happen when duly justified by market fundamentals. There are, therefore, a number of possibilities that ought to be considered in order to ensure that buying-in operates on a rational basis.
One option would be to start the next campaign (from 1st March) with buying in through a tender procedure. That means we decide together what volumes should be accepted and at what price.
To make that possible, the ceiling for buying-in at fixed price (currently 109 000 tonnes) needs to be set at zero in 2018. This is a Council competence and the idea is currently being examined with Agricultural Ministers.
You should not misunderstand what I am putting on the table – intervention will remain available as foreseen by the basic act, but it would be operate it in a controlled manner, on the basis of prevailing market conditions. This would be done through decisions being taken on a monthly basis on bids received from operators from March until the end of September 2018.
I look forward to discussing these options with you this morning.
My priority is to ensure that dairy farmers have the right tools at their disposal to be competitive and successful in the coming years.
There are huge opportunities on global markets. We will hear about this later today. The dairy sector accounts for more than half of our current agri-trade surplus – a fact which confirms the importance of the sector.
Indeed, today EU agriculture is firmly embedded in global markets, which brings clear opportunities but also more exposure to global dynamics, including price volatility, and uncertainty.
To maintain this competitive advantage, we need a modern and effective Common Agricultural Policy: adequately funded, simpler to administer and fair.
CAP post 2020
The Commission is currently exploring how to keep the CAP fit for purpose, by modernising and simplifying it to reinforce its contribution to EU political priorities and the Sustainable Development Goals.
A Communication to the EU Council and Parliament on “CAP modernisation and simplification” will be presented by the end of November, setting out the broad orientations for future policy development. This will be followed by legislative proposals in 2018.
We have already outlined three broad areas for priority action:
We need to foster a smart and resilient agricultural sector, which supports viable farm income, increases competitiveness and improves the farmer’s position in value chain.
We neef to enhance environmental sustainability and climate-resilience, by increasing climate change action, fostering the sustainable management of natural resources, and preserving nature and landscapes.
And we need to strengthen the socio-economic fabric of rural areas, including through generational renewal, fostering jobs and growth in rural areas, improving access to infrastructure & services, and reducing territorial imbalances.
The reflections on how to keep the CAP fit for purpose have been ongoing without prejudging the debate on the European budget post-2020.
Proposals for the next Multiannual Financial Framework (the so-called MFF) are due in May 2018.
We need to put forward a balanced and realistic MFF proposal; the share of the CAP needs to be maintained at a reasonable and appropriate level for the CAP to stay fit for purpose.
And I am counting on Poland, as a strong agricultural nation, to support this direction of travel. If we want to maintain an effective and well-funded CAP for the farmers of Poland, your farm sector and your elected representatives need to make their voices heard.
Implications of modernisation & simplification for dairy sector
Resilience is particularly important for your future success. I have mentioned that I believe the dairy sector needs to become smarter and more strategic in responding to market signals, but market success also depends on farmers having the right tools to deal with risks and crises.
The CAP currently provides a series of complementary instruments:
Direct Payments in Pillar One, which provide farmers with a basic level of security and stability;
A safety net for severe market disturbance;
And risk management measures in Pillar Two, such as support for insurances, mutual funds and an income stabilisation tool; as well as options for investment and diversification.
Moreover, research and innovation – financed via Horizon 2020 and rural development funding – and their translation into agricultural practice via training and knowledge transfer, investment in smart farming and advisory services is the clear way forward in terms of competitiveness, resource-efficiency and simplification.
These possibilities are already there. What we need for the future are two things:
We need EU farmers to make the most of these existing possibilities to strengthen their entrepreneurial capacity;
And we need to continue working on the efficiency of the CAP as an enabling policy framework.
Some elements that deserve special attention in the new CAP have already emerged:
Cooperation among farmers and along the chain should be fostered, including mutualisation and integrated services, for risk sharing purposes;
We will have to invest more in farmers’ involvement in the knowledge economy via education, training, networks, and knowledge transfer;
And we need to reflect on how implementation can be simplified to release authorities and farmers from administrative burden.
I am confident that if we succeed in implementing these changes, the dairy farmers of Poland and Europe will be able to look to the future with confidence. Thank you, and I look forward to hearing your thoughts.