EU Dairy Package 2016 - in detail

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At the July agriculture council, commissioner Hogan announced a new set of support measures for the EU dairy industry. The details are below:

1. The Commission will extend the ability to use Article 222 for another six months (note - no member state has yet used it).

2. Commission will extend Private Storage Aid for skimmed milk powder until February

3. The Commission is extending the intervention period to the end of 2016, after which it will roll over to the 2017 period and run continually until September 2017. The intervention ceiling will be held at 350k tonnes in 2016 and roll back to 109k tonnes in January 2016.

4. €150 million supply management scheme. This will be voluntary for farmers but compulsory for member states to offer. There will be four windows of application:

- mid September application for reduction in milk production between 1st Oct and 31st Dec
- mid October application for reduction in milk production between 1st Nov and 31st Jan
- mid November application for reduction in milk production between 1st Dec and 31st Feb
- mid December application for reduction in milk production between 1st Jan and 31st March

Farmers can only apply once and farmers will be paid 14€/c per kg reduction (equivalent to 12ppl). The Commission thinks this will reduce EU milk production by 1.1 billion tonnes. In the UK, farmers will need to provide the RPA with written proof of their 2015 production and their estimated production for 2016. Farmers applying in the first window (Sep 2016) will be paid in March 2017 with all money to be paid by September 2017.

Any farmer can apply, even if they are retiring or planning to process milk on their own holding, as long as they’re not contributing to an oversupplied market.

NFU comment

Daily milk deliveries are around 10.2% down on this time last year so UK dairy farmers have clearly reacted to the market downturn. Whilst this supply management scheme is far too late in having a major impact on the UK market a large proportion of dairy farmers will be eligible for the support – either as they have reduced production or if they are planning to retire from milk production.

5.  €350 million package – equivalent to £25 million in the UK. This has been allocated mainly on milk production levels but also some account has been taken on milk price changes and proportion of small scale farmers. This must be used for measures that contribute to market stabilisation and could include one or more of the following:

  • Production reduction (to fund exits, production reductions)
  • Measures to support small scale farming
  • Measures to support extensive production
  • Measures to support environmentally friendly farming
  • Measures to support co-operation
  • Measures to support quality schemes
  • Training in financial instruments

The EU Commission will not be drawn on defining small-scale farming or quality schemes and will allow member states to co-finance this package by 100%. This money can be used for dairy or any other sector and must be paid by September 2017.

NFU comment

Defra is yet to decide the best option for the UK and clearly the money will be shared between the devolved administrations. It cannot be paid as a one off payment as it was last year. Defra’s initial thinking is that it could be rolled into current RDP projects. The NFU would only support this if it was aimed at dairy farmers and supporting competitiveness and productivity.

The NFU is also considering whether this money could be used to help increase knowledge on dairy futures markets and risk management within the whole supply chain. Other options would be a dairy retirement scheme or support for better co-operation at farm level.

Last edited on: 01:08:2016

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  • Posted by: Charles SkeltonPosted on: 01/09/2016 12:08:27

    Comment: so where and how can we apply? c'mon RPA

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