Despite a series of reports that question the adequacy of the CAP Health Check considering the threats that the economic and financial crisis besets on the agricultural sector1, the European Commission and the Czech Presidency of the European Union do not seem to be going back on their liberal positions.
Proof of this is their absolute refusal, during the European Council of the Ministers of Agriculture on May 23, to question the gradual abandon of milk quotas in the European Union stipulated by the CAP Health Check in spite of the hardships that the European milk producers currently face. Considering that the continuous problems of the sector are no longer generated by overproduction but by the global economic crisis, the Commission endeavors to act solely on demand, by increasing public purchasing of milk (6,700 tons more than the 30,000 initially planned).
However, the situation is particularly tense on the milk market: in fact, the prices paid to milk producers have significantly dropped over the last months, partly because of a drop in demand on the global market, but also because of increasing competition from other countries and the abundance of supply 2 – all this in the context of an economic and financial crisis. France is not the only country to face these problems3 : in Germany, even the major milk operations are not profitable due to the market prices, which are around EUR 0.20 per liter.
Although, under these circumstances, several countries (including Germany, France, Slovakia, Hungary, Slovenia, Austria and Lithuania that account for 40% of the European production) wanted to reopen the discussions on the planned cut of milk quotas, the Commissioner of Agriculture, Mariann Fischer Boel, declared that it was a "stillborn idea," which "sends farmers the wrong signals."
The status of the European milk industry shows the inefficiency of the economic measures passed by the Commission to stabilize this strategic sector in the long run. The crisis that currently affects this industry is more global than the Commission seems to believe. It is a real regulatory crisis that requires the implementation of structural measures as well as matching economic measures. Let's hope that we don't have to wait for the disappearance of the European milk producers for the political decision makers to become aware of the urgency of this situation and act accordingly.
1 See Directorate General for Internal Policies, the European Parliament, "The PAC in the face of the economic and financial crisis" March 2009
2 See momagri, "Milk still hasn’t come out of it’s dead end?" 03/06/2009 http://www.momagri.org/UK/A-look-at-the-news/Milk-still-hasn-t-come-out-of-it-s-dead-end_451.html
3 See momagri, " The Dairy Industry Crisis: A Case Study" 11/24/2009, http://www.momagri.org/UK/Focus-on-issues/The-Dairy-Industry-Crisis-A-Case-Study_389.html