September Agriculture Council Dominated by Dairy

As expected, the current ‘dairy crisis’ dominated discussions at the September Agriculture Council earlier this month, although no concrete decisions were agreed on how to tackle the economic difficulties being faced. At the meeting France and Germany managed to garner support for proposals to increase levels of market support for the dairy sector (16 Member States in total) as well as a temporary suspension of increases to milk quotas (six Member States).

However, the majority of these proposals were rejected by the Commission as running counter to the direction of travel for the CAP agreed as part of the 2008 ‘Health Check’. In the last week, however, the Commission has announced its own proposals to address difficulties in the EU dairy market situation based on measures outlined within a report published in July.

Other issues discussed at the meeting included CAP simplification, authorisation of GMOs and the state of play with WTO discussions.

Discussion of the Dairy Market Situation

The Commission has repeatedly made it clear, that it is not prepared to consider options which would ‘contradict the Health Check’.

The current economic difficulties in the EU dairy market was the main item on the agenda at the Agriculture Council meeting which took place in Brussels on 7 September. Discussions centred around a report on the EU dairy market situation, published by DG Agri on 22 July and produced in response to a request from EU Heads of State at the European Council in June. Whilst it seems there was broad agreement with the Commission’s analysis as to the causes of the so-called ‘dairy crisis’, views differed on the measures to be taken to address the sector’s current economic difficulties.

The Commission has repeatedly made it clear, that it is not prepared to consider options which would ‘contradict the Health Check’. Proposals for greater market intervention, put forward in a letter supported by 16 Member States (AT, BE, BG, DE, EE, IE, FI, FR, LT, LU, LV, HU, PT, RO, SL, & SK), were therefore rejected on this basis. Specifically, the proposals included:

  • temporarily increasing the intervention price for dairy products;
  • increasing export refunds for butter, milk powder and cheese; and
  • reactivating aid for the use of skimmed milk products in livestock feed.

The Czech Republic and Spain have reportedly also signed a similar declaration subsequent to the meeting. In addition, a separate declaration supported by only six Member States (AT, DE, FR, HU, PT, & SK) called on the Commission to temporarily suspend the increases in EU milk quotas scheduled to be introduced in April 2010.

Whilst the official minutes note that the Commission has ruled out all of these proposals, it has agreed to consider options related to ‘labelling, quality, or promotion issues’. Discussions are set to continue at the October Agriculture Council, where the future of rural development is also on the agenda.

First Impressions of the Franco-German CAP Alliance

...it remains hard to judge how effective the grouping will be on future debates on reform of the CAP leading up to 2013

According to reports in the press, the two sets of proposals in relation to the dairy sector referred to above were sponsored by France and Germany, who announced the formation of a new Franco-German CAP Working Group on 2 July. The preparation of these documents - not officially linked to the activities of the Working Group - suggests that the two allies have had some success in creating consensus amongst Member States. However, bearing in mind the limited success in persuading Member States to sign up to the declaration on milk quotas, plus the Commission’s determination to rebuff most of their proposals, it remains hard to judge how effective the grouping will be on future debates on reform of the CAP leading up to 2013.

Competitiveness of the Agro-Food Industry

Amid concerns that retailers may be taking advantage of recent low commodity prices to profit unfairly at the expense of producers (and consumers), particularly in the dairy sector, the Commission presented the findings of a High Level Group on the Competiveness of the Agro-Food Industry. Agriculture Commissioner Mariann Fischer Boel also announced at a press conference after the meeting that the Commission is scheduled to publish a Communication on food prices with a focus on potential discrepancies between producer and consumer prices in November. In addition, another meeting of the High Level Group is due to take place in the first half of 2010.

Simplification of the CAP

The issue of CAP simplification was raised by Germany, with the support of 18 Member States (BE, CZ, DK, EE, IE, CY, ES, FR, LV, LT, NL, AT, PL, PT, RO, SL, SK and UK), which urged the Commission to move ‘as soon as possible’ to draft legislative proposals in order to avoid losing momentum in the process. A document outlining 39 proposals for CAP simplification, had previously been put forward by Denmark with the support of 12 other Member States, and is set to be discussed at the November Agriculture Council, with a view to implementation of some of the proposals.

GMOs and Feed Imports

Several shipments of non-GM soya imported to the EU from the USA have been rejected recently8 on the grounds that they contained trace amounts of unauthorised genetically modified (GM) material, principally the maize variety, MON88017. The issue arises because the authorisation process has been blocked by some Member States, despite a positive assessment by the European Food Safety Authority (EFSA). As a result, Agriculture Commissioner Mariann Fischer Boel told Member States that they should speed up the import authorisation process or else the EU could face a feed shortage which could result in increased costs for the livestock sector. The Commissioner received support from eight Member States (BE, CZ, DK, ES NL, PT, RO, & UK) and the Council is expected to vote specifically on authorisation of imports of the MON88017 variety at the October meeting.

WTO Update

‘Negotiations [on the Doha Round] may become difficult if, in parallel, discussions on the CAP post 2013 begin’.

Finally, the Agriculture Commissioner also provided the Council with an update on the WTO Doha Round of negotiations following a meeting of trade ministers in New Delhi on 3-5 October. According to the Commissioner, there was support amongst the majority of participants for agreeing a deal in 2010, although such a prospect was viewed as unlikely in the absence of significant progress in revising the negotiating texts by early 2010. In this context, it is interesting to note that a recent report undertaken on behalf of the European Parliament by the international law firm, Gide Loyrette Nouel, has concluded that ‘Negotiations [on the Doha Round] may become difficult if, in parallel, discussions on the CAP post 2013 begin’.

Sources

  1. Agra Europe (08/09/09) Latest EU Farm Council wrap-up.
  2. Agra Facts (07/09/2009) Agriculture Council: Further debate on dairy market, but no decisions.
  3. Agra Facts (15/09/09) More Member States sign up to Fr-D memo
  4. DG Agri (22/07/2009) Dairy market situation 2009.
  5. DG Enterprise and Industry (26/03/2009) High level Group on the Competitiveness of the Agro-Food Industry.
  6. Note from 16 delegations to the Council (08/09/09) Situation on the European dairy market (market interventions).
  7. Note from 6 delegations to the Council (08/09/09) Situation on the European dairy market (temporary suspension of milk quota increases).
  8. Note from the German delegation (02/09/09) Simplification of the CAP – Follow-up to Council Conclusions of 25 May 2009.
  9. Press release - 2959th Agriculture and Fisheries Council meeting - Brussels, 7 September 2009.

PUBLICATION DATE

22 Sep 2009

AUTHOR

IEEP

FURTHER INFORMATION

The Institute for European Environmental Policy coordinates CAP2020. It is an independent not for profit institute which undertakes research in a number of policy areas including agriculture and rural development.