16 January 2009

2 minute read

The European Commission has announced that as of next week it will reintroduce export refunds for butter, cheese and whole and skimmed milk powder. When intervention buying for butter and SMP begins in March, the Commission says that it will, if necessary, buy more than the pre-determined quantities through regular tenders. In November, the Commission reintroduced private storage for butter with effect from 1 January 2009 - including for butter produced in December. This represented an introduction of private storage earlier than is usually the case.

"The severity of the fall in milk prices over recent months has surprised many," said Commissioner Fischer Boel. "I have spoken to many producers during my travels to different Member States and their anxiety is clear. Now it is time for the European Union to help. Measures introduced in the Health Check will give the dairy sector an important boost, but we need to do something now because the Health Check will only apply from next season. I truly believe the measures I am proposing today will go a long way to stabilising the dairy market."

Following the unprecedented price rise for milk and dairy products in 2007 and the beginning of 2008, the situation on the dairy market has now been completely reversed. With increased supplies on the world market and reduced demand on the internal market, market prices for dairy products have been forced down to close to or even below intervention levels. Obviously, the price paid to milk producers follows the same route with substantial price decreases already recorded and with further falls likely.

As regards intervention, buying of butter and skimmed milk powder will resume on 1 March (with production from February being eligible) and remains available until the end of August. The first 30,000 tonnes of butter and 109,000 tonnes of skimmed milk powder will be bought in at a pre-determined price (intervention price).

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