Following the opening of a tender last week to start releasing the 350,000t mountain of skimmed milk powder (SMP) stored into EU intervention during the past year’s dairy crisis, Hogan said this Friday that the move would not dampen the recent rally on dairy markets.

There is no reason to think that such a move will prevent milk prices from reaching sustainable levels

“Some of you may say that my recent decision to open the sales compromises the recovery taking place on the protein market,” he told milk processors at the European Dairy Association congress in Nice, France. “But I can tell you that as long as butter and cheese prices remain remunerative, there is some margin for SMP to be more competitive on the world market. And certainly there is no reason to think that such a move will prevent milk prices from reaching sustainable levels, especially given that quotations for other dairy products remain high.”

Hogan cited the forecast by the European Commission’s Milk Market Observatory that prices for butter and cheese are expected to remain robust through early 2017.

The Observatory’s latest figures show that volumes of SMP, butter and cheese placed under Private Storage Aid – the other EU scheme to remove excess commodities from the market – are now all in decline, as more products come out of the schemes than go in.

The Commissioner placed the ball squarely in the processor’s court, to ensure they meet market demand and avoid repeating the imbalances that caused the price slump of late 2015 and 2016.

On the public institutions’ side, he noted that the Commission had taken 30% of one year’s EU SMP production, with member states advancing €600m to purchase it. Meanwhile, he said “dairy farmers have not been shy” in their efforts to rebalance markets, with 58,000 accepting to cut supply under the Milk Production Reduction Scheme.

As long as we produce what the market demands, recovery is guaranteed

“I am now looking for the same level of commitment from the industry,” Hogan told processors. “You know your clients and their needs. I urge you to remain customer driven and produce what they require,” he added. “As long as we produce what the market demands, recovery is guaranteed.”

Unfair trading practices

As part of his argument that market signals should become clearer for the whole dairy supply chain, the Commissioner highlighted two points in the recent report from the EU’s agricultural markets task force: “The report calls for new rules at EU level to cover certain unfair trading practices (UTPs), as well as the implementation of effective enforcement regimes in member states, such as through the use of an adjudicator.”

This indicates support for recommendations supported by farming organisations to re-balance power between farmers, processors and retailers, including the creation of a food ombudsman.

Hogan also clarified the timeline for a suite of CAP simplification measures announced earlier this year, including easier access to finance for farmers and increased freedom for producer organisations.

“All these proposals respond directly to the concerns of farmers, and I want them to become effective from 1 January 2018,” he said.

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