2013-05-13   facebook twitter rss
CAP Reform: What the Dairy Sector Needs

In view of the current trialogue discussions, the European dairy industry calls for a complete rejection of any proposal for regulated supply management measures in the dairy sector.

The dairy industry believes that an effective safety net as a proper solution to challenge price volatility will safeguard all the EU dairy industry’s chances to exploit the market opportunities brought by a growing demand for dairy worldwide.

Dairy Cows

photo © farm-images.co.uk

The European Dairy Association (EDA) urges all policymakers involved in the trialogue discussions to reject any proposal for supply management in the dairy sector. For EDA regulated supply management is simply the wrong tool to deal with the reality of today’s market environment. For Joop Kleibeuker, Secretary-General of EDA ‘these measures are unworkable and do not provide a solution for the challenges that the sector faces today’.

Supply management is not an adequate option to keep supply in line with demand. At a recent policy conference EDA organised it was clearly argued that reintroducing supply management by public authorities would be counterproductive, as the EU dairy sector has evolved to an open economy, in which international competitors would profit most from crisis supply management. In this context, Mr Kleibeuker adds that ‘quota only worked to stabilise producer prices because they were operated in conjunction with the open ended use of a full range of consumption subsidies, many of which have been discontinued now. We believe that in the current market environment supply management measures will not work to stabilise prices’.

According to EDA, supply management attacks expanding farmers but does not support efficiency’s improvement. It would have unknown implications for the EU budget. Strategically, it’s a dead end, unless the EU wants to resurrect market management, with the full range of costly measures that go with it.

Which measures and solutions should policymakers then be looking at?
‘In order to reduce the consequences of extreme downward price volatility’, Mr Kleibeuker states, ‘an operating and effective safety net is a necessary and easy-to-deliver tool. We believe this solution would have no impact on the EU budget and even be profitable on most occasions. This safety net should be supplemented with measures to help the development of risk management solutions.’

We understand that policymakers have to look at solutions to cope with extreme price volatility, but they should also take into account that the current market environment is one of growing demand for dairy, bringing a lot of tremendous opportunities for the EU dairy industry. EDA therefore pleads that any solution for price volatility should enable the dairy industry to take advantage of the current and upcoming market opportunities,’ Mr Kleibeuker concludes.

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