Local view for "http://purl.org/linkedpolitics/eu/plenary/2007-09-04-Speech-2-385"
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"en.20070904.29.2-385"2
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"Mr President, I wish to begin by thanking those of you who are still present for a constructive debate. As there do not seem to be major differences in our opinion on the milk mini-package, I would take the opportunity to use my final comments on the ‘elephant in the room’.
In that context, I am pleased to see the positive development of raw milk prices during the last few months: 15-20% has been reported in some Member States. However, we all know that the cost of production has been going up and milk production will only continue to expand if the profit margin can be maintained or even increased.
Therefore, I would take this opportunity to draw a somewhat positive conclusion. In a historical perspective, the current wholesale and retail prices are not dramatically high. The return from the market for the dairy industry and for the farmers is encouraging, and the public market support spending in this sector is now more or less reduced to actions with some social character.
We should not let our policy decisions be dictated by short-term developments within the dairy sector, and throughout the next 12 months we will have an excellent opportunity to discuss ways and means to make the dairy sector move forward in a sustainable way.
We all know that the milk-quota system is due to end by 31 March 2015. As I have already mentioned, I will launch a debate in November on the ‘Health Check’, and following discussions – including here in Parliament – we will launch all the legal proposals during late spring 2008, so we can hopefully agree on the legislation to take place from 2009. In this context, we will take the opportunity to discuss in a broader context the whole dairy sector.
I will examine which measures could be appropriate to try to find a soft landing for the expiry of the quota system in 2015. A soft landing could be, as has already been mentioned, some sort of an increase of the quotas before or in the mid-term up until 2015. I am quite sure that we will have a huge opportunity to have some very interesting discussions, including as regards the dairy sector in a broader context, throughout the next 12 months.
In the last couple of weeks, various stakeholders and media have put particular focus on the development of dairy prices in the Community during the summer. I shall be more than happy to have this opportunity today to put things straight in order to avoid potential misunderstandings. It is a fact that prices for dairy products have gone up substantially since the beginning of the year, in particular as a response to the market and, as rightly mentioned, not as a response to the increased production of bio-energy.
Of course, there are some explanations for the increase in these prices, and I would like to come back to this a little later, but first I shall just put things into a more general perspective.
We all know that the proportion of the income spent by European households on food has been going down gradually, year after year. Today we are in a situation where the Community is spending only about 12% on food and non-alcoholic beverages – a dramatic decrease, as you can see from the money spent. It was very interesting to see that a German newspaper made a very quick study, concluding that in order to buy one litre of milk a person had to work for 11 minutes in 1960 and only 3 minutes in 2006. While the average price for butter today is EUR 4.10, it was EUR 4.50 in 1982. These prices are nominal prices and do not take inflation into account. The current prices are coming from a historical low level, which was established after the 2003 reform, which for the industry provided a stronger competitive basis and for the dairy farmers provided compensation for potentially lower prices.
Let me now come back to the fundamentals in the current market situation. First, most subsidies have been suspended for some time and these are mainly the export refunds, the intervention buying, the various different disposal aids.
Secondly, we are in a situation today where intervention stocks are empty – with all the quantities sold out into the internal market.
Thirdly, the supply of butter has been reduced due to the lower production and empty intervention stocks. Cheese production was a priority use for milk fat until recently, when the improved prices for butter have led the industry to expand butter production again.
Fourthly, although the cow’s milk collected this year is slightly higher than last year, it does not fully meet the increase in demand.
I could continue naming other fundamentals, but basically we are today witnessing the play of market forces based on supply and demand. Gone is the pre-reform market attitude that the intervention level was the price leading. The industry is now taking genuine commercial decisions, providing maximum return for further investments, while also allowing higher prices to be paid to the dairy producers – the farmers."@en1
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