Mariann Fischer Boel, European Commissar for Agriculture – We introduce new measures to help dairy sector in EU

- The European Commission is going to introduce series of measures to help milk manufacturers in the states of the Union since their operations are under the influence of significant drop in prices of products in that sector for months – the Commissar for Agriculture, Mariann Fischer Boel, announced at "Green Week" in Berlin.

This week, the Commision will introduce financial aid for export of butter, cheese, fat and skimmed powder milk. EU will be paying the difference between the prices in Europe and in the global market, which are even lower, in order for European manufacturers to be internationally competitive.

- Just like before, the use of grants for export will be brought in accord with the rights and obligations of the World Trade Organization. The specific level of grants will depend on the offers we receive from the market, which will be evaluated according to usual objective criteria in order for us to make sure that the funds we grant will not be wasted - Mariann Fischer Boel explained.

The Commissar also announced introduction of measures for disburdening European market by eliminating a part of excessive production, which will stimulate growth of prices.

It is expected that the emergency purchase of butter and skimmed powder milk will start in March and that it will last until the end of August. First 30,000 tons of butter and 109,000 tons of skimmed powder milk will be purchased at previously agreed price.

Also, the Commission reintroduced private butter storages in November 2008, which were put in operation on January 1st, 2009.

- The seriousness of the drop in milk price has surprised many people over the last few months. I spoke to large number of manufacturers from all countries members and I can say that their fear is justified. It is now the time for EU to help – said Fischer Boal and added that she hoped that the suggested measures would contribute to market stabilization.

Problems of European dairy market

Current situation is completely different from the situation in 2007 and at the beginning of year 2008 when an unexpected growth of prices of milk and dairy products took place. Growth of supply in global market and drop in demand of internal market were the reasons why the prices of dairy products came dramatically close or even dropped below the level of the prices in the case of emergency procurement. The decrease in prices of individual dairy products, such as butter, reached as high as 50% in 2008.

Since the price in global market dropped below the level subsidized by EU, milk manufacturers in EU are not competitive. The situation is additionally aggravated by the emerging problems in the export sector, caused by the global economic crisis.

- By introducing these measures, the Commission wants to send clear signal to the manufacturers of milk and dairy products and to show them that it is willing to use all available instruments to support the market – Boel concluded.

It is expected that the main European competitors in the international market will not welcome these measures since EU already announced its intention to revoke all grants for export prior to 2013 if all other countries do the same.