|Paris, February 1, 2017
The public hearing on the post-2020 CAP must learn from the agricultural crisis
and from the success of the aid scheme for milk production reduction
Regulating markets is less costly than managing the impact of crises!
While the European Commission is initiating a public hearing on the post-2020 CAP, the think tank Momagri publishes an analysis on the aid scheme for milk production reduction activated in 2016 to tackle the overproduction crisis.
It may be recalled that European dairy farmers were offered the possibility to cut down production in exchange for a €0.14 subsidy for each liter of milk not produced. The target was to rebalance markets by reducing by 2.8% the production of the fourth quarter of 2016.
Proving wrong the experts who felt the measure would be rarely used, 271 out of the 28 EU members activated the procedure, and also applied the ability to supplement the European aid. As a result, France opted to raise to €0.24 the subsidy per liter of milk not produced, within a limit of 5% of production.
Momagri has designed an indicator of the program participation based on the synthesis of two variables––the share of production committed to reduction and the share of committed farmers in each member state.
Belgium ranks first in the synthesis indicator, thus showing the very strong commitment of Belgian farmers with nearly half of them (45.5%) adopting the measure for a 3.3% production decline. Ireland and Portugal also gain a place on the podium. Following in the ranking are France (32.3% of farmers and 2.9% volumes committed) and Germany (18.4% of farmers but higher committed volumes with 3.6%).
The current higher prices are in part the result of the aid for milk production reduction, whose price tag amounted to €150 million, in addition to the supplements implemented by member states. In the end, quite a modest figure to get the European dairy sector back on track, a sector that posts yearly sales of €97 billion (source Eurostat).
Might it have been better to implement the measure sooner? It would have prevented sending stocks through the roof with 355,000 tons––three times the ceiling set in the latest reform––for a cost exceeding €600 million. Especially since these stocks continue to impact prices.
The program also reached a second objective: Proving that regulation is not dead! This is why Momagri will actively participate in the European Commission hearing to put forward its policy proposals for a new strategic course for the CAP.
1 The complete study is available from:
+ 33 6 62 23 34 45