The Milk Reduction Scheme: Good news for a truly European approach

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The European Commission can rightly be proud of the success of the milk reduction scheme launched in early September. With 1,07 million tonnes to be withdrawn from the market, the €150 million milk reduction scheme announced in July has shown its capacity to be an effective tool to rebalance the market and contribute to the upwards recovery of the milk price.

Although it is still too early to draw precise conclusions, it is clear that the success of the scheme has exceeded most of the expectations and the fears expressed by some experts. Even in Ireland, where very few producers were expected to be attracted by the compensation for reducing their production, 4.447 producers are about to take advantage of the scheme for a total amount of €10,4 million in financial support. This means that Irish producers will receive €2.380 on average, while the scheme will benefit 1.849 producers with an average support of €8.540 per farm in the UK; 3.932 producers (€2.800 on average) in the Netherlands; 9.947 producers (€4.060 on average) in Germany; and 12.957 producers (€1.960 on average) in France, which will therefore have a positive impact on the rebalancing of the EU market.

These figures are clearly showing the benefit of a pan-European targeted measure, which allows focusing public spending on producers that contribute to the rebalancing of the market by reducing their production levels, in a situation where the increase in EU milk production highly exceeded the demands of the market.

It is important to underline that this is the most EU wide tool that has been activated by the European Commission since the beginning of the crisis.

This confirm the analysis of Farm Europe, presented at an early stage of this milk crisis, that the money dedicated to the first aid packages would have been better spent on such a EU measure.

An early move would probably have reduced the length of the crisis and also lowered its costs for the EU budget, considering that more than a billion euro has been spent in total and that the first €500 million package mainly took the form of a non targeted emergency support managed by EU Member States, without sufficient coordination and without a clear positive impact on the easing of the economic crisis.

Now, the implementation of the second part of the July package has to be carefully monitor as well as the need of an increase envelope for the reduction scheme depending on market developments in the coming weeks.