THE European Union must not overreact or under-react to the current weakness of the dairy market, according toFarm Commissioner Mariann Fischer Boel.
“Certainly, I recognise the pain that many farmers are going through with milk prices where they are at the moment,” she said.
Speaking in Brussels, she said it would be an overreaction to delay the planned increase in milk quotas, as some have asked to do.
“If we want the dairy sector to restructure in the right way before the quota system ends in 2015, we must send out consistent signals about this.
“If we agree an expansion of quotas, then go into reverse gear on this a few months later, dairy farmers won’t know where they are.
“And they may start to see all policy decisions as ‘provisional’. This would be a disaster. Good policy is clear policy,” she said.
Ms Fischer Boel said she did not think the commission is under-reacting in its response to current problems. There’s actually a great deal being done to help the sector.
“First, we must never forget that reforms to the dairy sector have created direct payments worth €5 billion a year — €5bn which dairy farmers receive whatever the weather. Secondly, we’ve been providing export refunds and aid for private storage since January.
“Thirdly, intervention is in full swing — and I’ve indicated that we’ll hold regular purchasing tenders until the end of August, which will take stocks above the basic ceilings.
“Fourthly, the economic recovery package will provide extra money to help the dairy sector to restructure,” she said, pointing out that member states also have various other tools available to them including export credit guarantees and state aids.
Noting signs that dairy prices are already stabilising, Ms Fischer Boel said she believed the current EU policy response will be strong enough to cushion farmers against the worst of the market crisis — but not so strong that it insulates them from market signals and harm their long-term interests.
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