Author: Yves Madre

Lack of ambition and perspective in the reflexion paper on the finances of the EU

Posted on - Posted by Yves Madre

On the 28th June, the European Commission (EC) published a Reflection Paper on the future finances of the European Union (EU). The Paper is presented as a starting point for a debate that will inform the EC’s 2018 proposals for the EU’s post-2020 multi-annual financial framework. It includes initial ideas and options which it hopes can be developed through the negotiation process to ensure an effective future budget.

Yet, when it comes to the EC’s ambition for the future of Europe, it simply leaves us baffled. We are also concerned at the absence of any economic vision for Europe’s agriculture and agri-food sector. The paper ignores agriculture’s strategic importance for the sustainable development of over 70 % of the EU’s territory and it ignores that, with 16 % of total industry turnover in the EU, it is second only to the metals industry. It ignores, moreover, that agriculture employs 10 million people and that 4.1 million industrial jobs directly depend on it.

Read our full analysis here.

OPINION OF THE ADVOCATE GENERAL ON ENDIVES, FINALLY!

Posted on - Posted by Yves Madre

In the context of the 2007 dispute between the French Competition Authority and the association of producers selling endives as well as other operators, the French Court of Cassation filed a complaint with the Court of Justice of the European Union (CJEU) about the capacity of these organisations, producers, associations of producers’ organizations and other operators to consult on prices or quantities marketed.

In the opinion, which has been delivered today, the Advocate General observes that the common rules on competition law do not apply to collective bargaining practices of selling prices (or single selling prices) conducted by a producer organization or an association of producers’ organizations, whose objects include the marketing of the products concerned. The same applies to consultation on quantities to be placed on the market and to the exchanges of strategic information.

In other words, a PO or PDO is deemed to have the same rights as a commercial enterprise under private law ; A PO or a AOP is indeed an entire legal entity.

In this context, the common law of competition must apply to consultations on prices and quantities to be marketed or to exchanges of strategic information between separate legal entities – hence, between different POs or different AOPs – which are therefore prohibited.

Moreover, it is also prohibited to fix a minimum price between producers, either between different POs (or AOPs) or within a PO (or AOP).

This official opinion from the Court of Justice of the European Union is a positive signal for POs and AOPs:

– On the one hand, it confirms the orientation of the legislators taken during the CAP Reform of 2013 on the specific law applicable to POs and AOPs in the agricultural sector, namely the provisions of the CAP prevailing over common rules of law competition.

– On the other hand, this opinion also confirms the EU acquis, prior to the 2013 Reform, and should therefore put an end to the debates on interpretation on this extremely relevant point for the organization of the sectors. It is desirable to have it confirmed by the Court of Justice, since it will make it possible to clarify the existing margins of manoeuvre for POs and AOPs once and for all, and in particular, to avoid substantive divergent interpretations by competition authorities at national level.

DAIRY PACKAGE III: THE NEED TO TAKE ACTION TO REDUCE MILK PRODUCTION FINALLY RECOGNISED

Posted on - Posted by Yves Madre

At the July 18 meeting of European Agricultural Ministers the European Commission presented a new package of emergency measures to help European dairy farmers who have been suffering for the last two years from collapsing market prices.

In brief: 

The Commission appears to have accepted the principle that the European market needs to be rebalanced by recalibrating supply so that it is more in line with demand. Nonetheless, the actual impact of this new package will largely depend on:

  • the way the Commission implements the new measure to incentivise a voluntarily reduction in production, and in particular on the level that it sets for aid per tonne withdrawn from production;
  • the Commission ensuring that measures that MS must notify to it under the conditional adjustment aid budget effectively contribute to the number one objective of this conditional measure, which is, as stressed by Commissioner Hogan, “to re-balance the market by freezing or reducing production”.

At the July 18 meeting of European Agricultural Ministers Commissioner Hogan presented a new package of measures to help the dairy sector to recover from the deepening crisis that has been engulfing it for almost 2 years now.

The measures recognise that recovery depends on re-balancing the European market, which in turn depends on reducing production. We agree with Commissioner Hogan, who stressed today that the “continuing increase in production … is simply not sustainable in the current market conditions”. This analysis is in line with the view defended by Farm Europe since 2015 and with the measures we have put forward in recent months.

The package presented by the Commission to the Council has three strands of action:

  • a €150m plan to encourage a voluntary reduction in European milk production. Such a plan would certainly appear, in principle, to provide a response that is well-matched to the imbalances in the market. However, its success will depend on the rate of aid that the European Commission decides to provide per tonne withdrawn from production. To have a real impact – an impact that is absolutely vital after a year of crisis – the rate must offer a credible incentive, one that, in particular, persuades the most competitive producers (who have contributed the most to the increase in production) to voluntarily reduce their production. The aid must therefore be set above their marginal cost of production for a litre of milk. In parallel with the new €150m budget, the objective of a 1.8m tonne reduction has been mooted in recent days. These figures seem incompatible; the rate of aid they imply is unlikely to ensure the measure’s hoped-for effectiveness, and would not provide a credible incentive. In light of the announced budget, the most optimistic scenario for voluntary reductions would be a million tonnes, even including national contributions. Moreover, the effectiveness of the entire recovery package will depend on the conditional adjustment aid being fully consistent with the objective of reducing production.
  • €350m of conditional adjustment aid, distributed in national allocations, calculated using the allocation method used by the Commission last autumn. This strand’s coherence and its ability to contribute to ending the current crisis will depend on the Commission ensuring that the measures put in place by MS apply conditions that guarantee the adjustment of supply and, thereby, a re-balancing of the market. The five themes for conditions put forward by the Commissioner under this strand (support for small farms, extensive production methods, environmental commitments, cooperation projects, quality schemes and training in financial instruments) will have to contribute to re-balancing the market by freezing or reducing production. For Commissioner Hogan, this is this strand’s number one objective. The specific measures that MS will set out under it must be notified to the Commission. It will therefore be incumbent on the Commission to ensure that such measures are consistent with the goal of adjusting supply. Under no circumstances should the Commission approve, under this strand, any measures that provide financial aid that allow or incentivise continued increases in production.
  • The option for MS to decouple coupled payments to dairy farmers − who will continue to receive aid but with no obligation to maintain their initial herd size. This strand of the package of course aims to guarantee historic (coupled or decoupled) aid levels that support farmers’ incomes, even if they halt all or part of their dairy production. But it must also be analysed in terms of the collateral impact it could have, especially on the bovine meat industry. In some MS dairy farmers are already converting to bovine production. What impact will this arrival of new bovine producers have on existing producers given that the former will now be benefiting from ‘improved’ decoupled CAP aid of the same level of the coupled dairy aid they were receiving in 2016. The bovine meat sector is very fragile. Any new destabilising factor could plunge the sector deeper into a crisis that is now emerging due to the expected influx of cull animals from the dairy sector in the coming months.

A EUROPEAN POLICY IN NEED OF OVERHAUL OR ADAPTATION?

Posted on - Posted by Yves Madre

While the debate on the necessary evolution of the future CAP is about to rebound, thanks to the informal Council of agricultural ministers and to the Dutch presidency, this weekend, it is a good opportunity to come back on the discussion that has been on going around Farm Europe activities for now more than one year.

This work, based on the strategic note published here in January, has been focusing on 3 main topics which should be at the core of any agricultural policy in the future: Resilience, Sustainability and Investments.

The 2014 reform has consolidated the ‘public goods’ component of the Common Agricultural Policy. However, the economic reform of this policy which remains the primary aim of common European policy, is still to take place. Economic reform is a matter of meeting the most pressing societal challenge: sustainability of production, or, in other words, the ability of agriculture to meet the needs of the planet and of the responsibility which the EU must assume in this regard.

In responding to this issue, all actors are confronted with a number of challenges:

  • the challenge of sustainable and consistent agricultural and industrial investments;
  • the challenge of integrating innovation with efficient technologies;
  • the challenge of market volatility, and ensuring that it does not interrupt the sustained growth of production.

In the EU, agricultural productivity has declined for over two decades. Income per unit of agricultural work has stagnated since the mid-90s in the EU-15, despite the restructuring of farms and the decline in the AWU: the efforts made by the agricultural sector seem to be consumed by the constant decrease of public aid (CAP) in real terms and the transfer of value added towards other links in the chain.

Today, many sectors find themselves in urgent need of investment to ensure their competitiveness.

Understanding the indivisibility and mutuality of the two components – environmental sustainability on the one hand, and economic sustainability on the other – seems to be the primary condition for ensuring sustainable development and effective public policy.

In this context, three key words are essential: Resilience, Sustainability and Investment.

Does the current CAP provide adequate responses?

Responding to market volatility:

 The EU is the only major agricultural area in the world responding with a scheme of aid decoupled from production. Beyond the comparative advantages of the EU system, it is disputable whether or not the European model remains appropriate when all its competitors play with a different set of rules. Confronted with market crises, the new CAP arrangements remain, to this day, rudimental (schemes for income stabilisation in 2nd pillar) or have proved ineffective in the face of recent crisis (emergency measures and markets measures of the single CMO).

Henceforth, it is necessary to appraise the possibility of moving part of the CAP to a system of income and margin insurance in two stages: with a first level of  basic (European) insurance (by sector?), financed by the CAP and for a minimum level of insurance tied to average production costs; a 2nd level of guarantees, chosen by farmers, of positive margins or positive revenue, (by production?), co-financed by the EU and based on a number of measures, whether European, national, or regional. It should also be assessed the possibility of developing individual savings at farm level, for example via accounting provision.

 Sustainability and compensation for public goods:

 Both the greening measures and measures of the 2nd pillar are criticised due to their complexity and/or their questioned efficiency. For the future, we could work on a single system of aids, with:

1)   one measure to respond to the challenge of providing public goods at the European level, allowing economic actors to decide and to mobilise the most appropriate means to achieving this;

2)  one measure to punctually compensate the costs linked to the commitment to go beyond the minimum in order to respond to specific regional issues;

3)  one measure to address the structural lack of competitiveness of a region or of a specific sector in a particular region.

For the ‘basic public goods’ component, can we address the need to move towards an objectives-based policy, concerning the environment/emissions (greening and agri-environmental measures)? From this perspective, two schemes are conceivable (one being exclusive of the other):

  •  Either based on the ergonomics of the current greening policy, to recognise the use of advanced farming techniques as a mean of fulfilling all greening requirements;
  • Or based on a balance sheet of farm emissions, with a definition of the objectives to be achieved but not of the means to achieving them.

For the component of sustainability, consumption patterns may be considered, via, for example programmes of distribution allowing the delivery of real ‘food stamps’ based on the American model, by promoting healthy eating in schools (school canteens) and public services (hospitals, the canteens of administrations, etc.), and with distribution to organisations for the poor. These “EU food stamps” must be subject to criteria of origin for such purchases.

Policy of Investment:

Should the CAP establish greater means of support for investments? If yes, is there a need for a European plan for competitive investments in the agricultural sector, in order to stimulate a technological leap towards an “agriculture of performance”?

In this context, and given the new economic environment of increased market volatility and the need for investments, do the financial tools on which investments are based require adjustment?

▪       Bank guarantees

▪       Insurance “income loss, margin loss”?

▪       Role of public support via the CAP?

▪       Role of the EIB, commercial banks, and insurance companies?

 All of these issues and their possible paths for the future are under analysis in the daily Farm Europe’s work and will be assessed and discussed at the Global Food Forum to take place in Milan, Italy, later this year (for more details, do not hesitate to contact us at : info@farm-europe.eu).

Has the Common Agricultural Policy realised its income objective?

Posted on - Posted by Yves Madre

Improving the welfare of farmers has always been an important goal of the European agricultural policy. When the Common Agricultural Policy (CAP) was created in 1957, one of its five objectives included in the Treaty of Rome was “to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture”.

In order to assess how successful the Common Agricultural Policy has been in achieving this objective, Farm Europe has examined the evolution of farm incomes in Europe and the evolution in comparison with those of one of our main competitors: the United States (full study available here).

The European Union and the United States adopt a different approach to support the incomes of their farmers. While the Common Agricultural Policy (CAP) of the EU mainly provides direct payments, the US has terminated this payment system and now focuses on supporting the use of agricultural insurances.

The analysis of the statistics provided by the FADN and the USDA ERS enables to evaluate whether the Common Agricultural Policy has achieved its main objective of increasing the earnings of European farmers.

Firstly, the data on Net Farm Income levels showed that after 2006, when farm incomes were still on the same level in both parts of the world, the United States has managed to double its incomes by 2013, while the European Union experienced stagnation and even a slight decrease during the same period. Furthermore, while these general figures suggested that incomes have been relatively stable in the EU, this masks the fact that farm incomes were highly volatile in the majority of the member states.

Secondly, a focus on the different agricultural sectors revealed that the income of EU producers has dropped since 2004 for half of the commodity categories and that almost all the EU agricultural sectors have experienced a stagnation or decrease since 2010. In contrast, between 2010 and 2013, the United States managed to raise the incomes of all their agricultural sectors significantly. The evolution of the sectoral incomes within the EU member states also exposed that most of the agricultural sectors in Europe have been affected by high fluctuations in revenues.

Incomes of European farmers have not improved since 2004, despite the fall in the number of farmers and some on-going restructuration of the EU agri-sectors, and that they were not shielded from volatility.

These evolutions of incomes in the EU should lead us to question the effectiveness of the agricultural policies put in place on three essential elements:

– the creation of a positive environment for the competitiveness of agricultural businesses, encouraging investment in productivity and sustainability;

– the opening of new markets, both for exports and in the domestic context, for each sector, notably via commercial leverage, innovation, and regulation;

– the capacity of the agricultural sector to be effectively armed at the sectoral level and at farm-level in order to continue to grow on volatile markets.

In other words, this data raises the question of the effectiveness of the CAP as it is today and as it has evolved since the start of the early 2000s. In view of the challenges of sustainable growth and competitiveness, the EU must provide the means to the European agri-food sector to regain its unequivocal dynamism. It is high time, now to work actively on that matter and to elaborate concrete proposals. This is on what Farm Europe is focusing with proactive stakeholders.

Anti-crisis dairy package II: What hope for the dairy sector after the Agri Council ?

Posted on - Posted by Yves Madre

Six months after a first package of measures – 500 million Euros of funding and no tangible policy response to the crises affecting the dairy and pig meat sectors – the Commission has announced a second package of measures following yesterday’s meeting of the Council of Agriculture Ministers.

Will this package do anything to improve the very difficult situation that European farmers have been enduring for months now?

Unlike his predecessors, Commissioner Hogan cannot count on a miraculous recovery in world markets to make up for Union low response. General economic trends for both world markets and individual sectors are depressed and analysts agree there is little cause for optimism in the near term.

Commissioner Hogan has got it right: the crisis is global, it is deep and it is affecting farmers in all 28 Member States. Given this, it is reasonable for the agricultural sector to expect comprehensive and coordinated action from European policymakers to ensure a much needed recovery.

The evidence shows that, since 2007, theories that assume a linear elasticity between supply and market price are no longer valid at the point when the market switches from equilibrium to disequilibrium. A supply reduction of just 2 to 3 % in the dairy sector would cause prices to jump sharply in the European market, and significantly more than the 5 to 6 % that analysts would have predicted in the past for such a reduction.

Although the Commissioner had, speaking before the COMAGRI, shown his determination to identify solutions, and had begun to outline a number of interesting ideas, it was clear from the contents of the new package put forward at the conclusion of the council meeting that his room for manœuvre was limited. The new package includes:

  • a renewed commitment to measures already announced 6 months ago;
  • the possibility, for those Member States who wish to do so, to provide funding to farmers of up to 15 000 € per holding;
  • voluntary reduction of production: the possibility to make use of article 222 of the Single CMO Regulation, which allows (groups of) producers in the MS who request to do so, to temporarily jointly manage their production volumes, without crossing the red line of discussing prices.

The package amounts to, therefore, national and/or local measures, implemented if desired by the MS and funded by the latter using their own resources.

National financial support will, where it is provided, offer some much needed if only short-term relief to farmers in dire need of support.

However, the impact of the use of article 222 is to say the least hypothetical. We need only recall that it was not designed to be used in the circumstances facing the European dairy sector today. Rather, its purpose is to enable economic actors, which together possess a real capacity to modify trends in their markets, to jointly organise and manage their production, particularly with respect to volumes and promotional activities. However, by its very nature, article 222 can only work where its target markets are relatively modest in scale.

For a dairy sector which is, in the words of the Commission, in the throes of a crisis that is international, whose production is a global commodity, what benefit could a single group of producers gain from independently and unilaterally deciding to reduce their production, at their own cost and without any guarantees – or rather with the virtual certainty that they would not have the firepower to induce a recovery in the market?

At most, such a group may be tempted to use article 222 to implement more aggressive promotional activities with a view to pulling market share away from their neighbours using a promotion-price marketing strategy.

Without strong European incentives (i.e. European political will but also a decision to make credible funding available), a return to a virtuous spiral for the European dairy sector would seem to still be some way off following the latest package of proposed measures, which is, like its predecessor, unlikely to make any meaningful headway.

At the very best, the new package is a gamble with the future of the sector, despite the fact that simpler measures could be put in place by making use of the crisis reserve fund, and avoiding a return to a narrow quantitative demand management approach. A mechanism based on a financial incentive to reduce production using a coordinated European auction mechanism, managed at European level, may today offer the only economically credible solution that will:

  • give tangible short-term results, and;
  • protect Europe’s production capacity and capabilities.

Crisis of the Agricultural Markets: Don’t be afraid of using the crisis reserve!

Posted on - Posted by Yves Madre

In his speech to the COMAGRI members on 7 March in Strasbourg, Commissioner Hogan noted very clearly the parameters of the possible emergency responses to crises which, to date, have not been curbed or mitigated, and which have severely affected the European agricultural sector.

While the challenge today is to quickly break the downward spiral in which all of the agricultural sectors in crisis find themselves, all of the tools that the Commissioner has asked his expert services to appraise converge on one prerequisite: funding requirements.

So far, all measures which have been taken to address the crises in recent years, including the €500 million package put on the table last autumn by Commissioner Hogan, have been funded by budget margins available within the framework of the CAP.

Today, for the first time, it is no longer possible to finance in this manner crisis measures which would be commensurate to the damage suffered in the sector.

It seems equally implausible to expect a contribution from the EU budget beyond the CAP headings in the current economic circumstances, and in view of the other challenges which the European Union is facing and for which it is currently seeking funding as well – notably the refugee crisis.

Therefore, the equation has been clearly defined by Commissioner Hogan in Strasbourg: the use of the reserve crisis appears to be the only way to secure funding within the framework of the CAP in order to allow concrete action.

The question is whether the will is there to use such a reserve: on the one hand, the political will of the co-legislators; on the other, the conscious choice of the agricultural profession to use this tool as a financial arm of solidarity among the agricultural sectors.

As for the political side, the choices of both the European Parliament and the Council of Ministers during the negotiations of the last CAP reform were extremely clear. This tool was adjusted and fine-tuned at the request of the co-legislators, precisely in order to permit the Commission to intervene quickly, with flexibility, and with the financial means to act in the absence of other financial margins within the CAP budget.

The money from the crisis reserve is money belonging to the farmers, drawn as it was from the farmers’ direct aids. Thus, the so-called ‘reserve’ was designed, desired, and assumed upon the adoption of the CAP reform by the co-legislators.

One argument raised variously in recent months against activating the crisis reserve has been that since European agriculture has more or less suffers every year from a crisis in one sector or another, to start using the reserve crisis would open the door to its recurrent use.

An original argument, if there ever was one. In other words, they would avoid using a tool because it risks being efficient, and may therefore be employed again in the future.

However, this tool, useful and to be used, should not be confused with a source which it is possible to draw on without limit. If the amount of €400 million is by no means an intangible ceiling, each use must be carefully justified regarding the measures proposed for financing and their effectiveness.

It should be possible to demonstrate to each of the European farmers who have indirectly financed these measures that they are able to respond effectively to problems, that they can provide a comprehensive response to stop the haemorrhage affecting – directly and indirectly – the entire European agricultural sector, and that they are by no means financed by yet another thinly spread policy.

Confronted with an economic crisis of vast magnitude, it is economic measures, rather than ‘political’ ones, which are anticipated and hoped for, and it is only in this – economic – context that the use of the crisis reserve will make sense and will be understood and accepted.

And, in this context, a complementary ‘political’ measure might be to increase the crisis reserve for next year, in addition to its deployment this year.

Agricultural Markets and Public Policies: Do European Farmers Compete on a Level Playing Field?

Posted on - Posted by Yves Madre

As analysed in the Farm Europe report ‘How to tackle price and income volatility for farmers? An overview of international agricultural policies and instruments’, all the major agricultural powers at global level have developed crop insurance programmes in recent years to deal with climatic and/or sanitary events, and insurance represents only one part of their range of more or less sophisticated policy measures dealing with market volatility.

Except in the European Union, where the development of insurance tools is still in a rather embryonic state, elsewhere across the world, the payments made by farmers on insurance premiums are heavily subsidised by national policies.

Beyond a first safety net made of production insurance, countries such as Brazil and China structured their agricultural policies to manage market and income volatility with guaranteed prices defined at regional level. These tools are designed to maintain the profitability of the sector during market crisis. Moreover, these measures are supported in Brazil by a policy of massive credit aid (for which the reimbursements regularly differ in practice, and a part of the interest rate is compensated by the state). In China, the guaranteed price policy and massive public purchases are complemented by direct payments per hectare, despite the fact that the guaranteed prices are already very high.

The policy developed by the United States with the 2014 Farm Bill joins the objectives of the Chinese and Brazilian policies: guaranteeing the incomes of agricultural producers in the event of declining production prices. By abandoning almost all direct payments provided to farmers in favour of price and income insurance based policy, the United States provides farmers the guarantee that they do not have to bear the financial impact of heavy agricultural losses below a predefined level.

Australia has set up, alongside aid for investments and environmental preservation, a public policy based on crop insurance programs, subsidies and tax concessions, encouraging precautionary savings. Since 2014, measures to support farmers’ incomes have been added to this range of instruments. These measures are triggered individually in the event of a significant decline in agricultural revenues. The payments aim at providing a minimum income to farmers for a maximum period of 3 years, in parallel with the establishment of an individual recovery plan.

Meanwhile, since the 1990s, the European Union has pursued a policy seeking to decouple public support and production, advocating a market-oriented agricultural sector. Only in the face of major market disturbances, ex post response measures can be taken, often only under pressure from the industry and certain member states.

This difference in public policies is illustrated by two figures: 60% and 1%. While 60% of the US Farm bill is channeled to insurance devices and 1% for direct aids to farmers, 1% of the EU CAP budget goes to insurance-related measures, and 60% to direct payments for farmers.

Today, the economic efficiency of these various public policy schemes should be analysed without prejudice, excluding any return to massive intervention policies and the management of public stocks, which are now politically and economically irrelevant.

Apart from this comparative analysis on efficiency, the following dimensions should be considered:

  • The degree of stability in turnover and income of agricultural producers, at both the farm and sectoral level.
  • The economic relevance of the measure: the ability of the measure to actually benefit farming and its development, versus the degree of public support for actors other than agricultural producers.
  • The degree of reactivity to the farming sector: in an open world where economic actors are in almost immediate competition for the same markets, with different instruments, are European farmers on an equal footing to face current events and prepare for the coming seasons?
  • Impact on the capacity of the agricultural and food sectors to achieve a sustained growth in spite of market disturbances.

These elements constitute the framework within which Farm Europe develops its reflections on insurance devices as possible answers to market challenges faced by European agricultural sectors.

Milk Markets: when the time for recovery will come…

Posted on - Posted by Yves Madre

Beyond the measures confirmed and detailed by Commissioner Hogan on 15 September (which will be discussed below), global markets continue to struggle. The defection by Russia, and particularly by China, has intensified the imbalance caused by a production which has grown, in these last months, far higher than the demand.

Some hope for a recovery in the form of the return of Chinese purchases, whereas producers continue to believe in the four principal global exporters. This is a desirable effect and will be, given the current state of affairs, advantageous.

However, two elements should be taken into consideration:

  • the political will in China for the development of the country’s own milk sector, as seen also in Russia. This approach could cause leaders of these countries to manage their purchases, pace and volumes in a new and differentiated manner.
  • the fact that available stocks on sale among exporters are very important, notably regarding milk powder. Besides the quantities which will be put under the private storage scheme in the European Union, other stocks remain immediately available and will have an important buffer effect on prices (particularly those paid to producers) during the recovery of global demand.

With a price of less than 20 cents and the amount in stock in New Zealand, for example at Fonterra, European milk producers risk facing a sluggish economy for several months.

Among the measures refined and presented to Member States by Commissioner Hogan on 15 September, the decision to increase private storage aid for  milk powder by 100% is undoubtedly the one which will have the most rapid effect in the attempt to prevent the downward spiral of prices in the European Union. If the quantities stocked and frozen for a minimum of 9 months are sufficient, the imbalance in European supply-and-demand could be diminished, ensuring a healthier market in the short-term.

And it is indeed only short-term: European operators are unable to store powdered milk for the global market. They have neither the means nor the will. With regards to prices in the EU, their short-term recovery will be subject to the pressure of a risk of opening the floodgates to the stocks of other big exporters if they witness a substantial recovery without a significant global recovery.

When this global market will begin to stabilise (this is far too early to anticipate positive signals at this stage), the competition between exporters to put stocks and new productions on the market will be strong.  In this sense, the supplementary efforts to aid the promotion of dairy markets should be acknowledged as highly valuable and should be fully operational by 2016.

The dairy industry has operated in a new context since 2007, with significantly high price fluctuations (both upwards and downwards) at a higher frequency than previously. The current crisis is not the last.

In this sense, we can only hope that the outline sketched by the Commission during the Council of Ministers of Agriculture of 7 September, in terms of new tools to deal with debt in the milk sector and the involvement of the EIB, materialises quickly. This could represent a viable response to enable the increased resilience of a sector whose development should not be broken or hindered due to economic crises which are now inherent within it.