The dairy sector is beginning to show signs of recovery with milk prices rising, said Eskil Erlandsson, President of the EU Agricultural Council, however there is still a milk crisis in many member states and as politicians it is our duty to listen to farmers.

* "I am certainly not saying that we've got to where we want to be. But we are definitely heading in the right direction."

EU Agricultural Commissioner, Mariann Fischer Boel

Speaking at the informal lunch yesterday (5 October), President Erlandsson and Commissioner Mariann Fischer Boel outlined what would be discussed at a formal meeting on 19 October in Luxembourg. On the agenda will be butter and milk powder intervention prices, and other short term measures to help stabilise the milk market.

Commissioner Fischer Boel announced that a 'high level support group', exclusively for the dairy industry would begin work next week through till June 2010 to strengthen producers long term position in the food chain. The group is expected to discuss the contractual relationships between producers and dairies, strengthening producers bargaining power, differing market instruments and transparency, innovation, research and future markets.

She said that there was 'widespread' support throughout member states for a regulated framework to improve the market in the long run, stressing that it would uphold policies put in place through the health check, primarily the end of quotas in 2015. She could not comment on what the framework would cover.

Commissioner Fischer Boel said that the informal meeting had shown a willingness in the market to provide long term and medium solutions.

When asked about her previous suggestions of a flexible financial envelope, the Commissioner said she saw only two options. With the EU 2010 budget there is little possibility for manoeuvre, the first option would be to ask member states to pay money, she was aware that this was be unlikely in many member states as financial ministers would be unwilling to take away from other areas. The only other option would be to reduce direct payment to all farmers in Europe. She believed neither of these would be successful solutions.

Formal decisions are expected to be made in Luxembourg on 19 October.

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