Marketsituation and perspectives

Carlos MARTÍN ÓVILO

DG Agriculture and Rural Development

European Commission

Dairy Press Tour 2013Charmey - 27.10.2013

1. Milk quota system

2. International competitiveness

3. Internal market

2

• Introduced in 1984, for 8 years.

• Extended in 1992 and 1999 reforms.

• CAP 2003 reform: Quota until 1 April 2015.

• Health Check 2008: soft landing (5 x 1% in 2009 – 2013).

3

Milk Quota system

1. Milk quota system

2. International competitiveness

3. Internal market

4

EU competitiveness - Milk

5

Increasing demand:The main driver in the dairy outlook

6

EU dairy exports(in 1 000 t)

7

EU world market share

8

9

7.7%

9.0%

9.5%

10.2% 10.1%10.3%

10.6% 10.7% 10.7% 10.7% 10.8% 10.8%11.0% 11.1%

6%

7%

8%

9%

10%

11%

12%

2 009 2 010 2 011 2012e 2013f 2014f 2015f 2016f 2017f 2018f 2019f 2020f 2021f 2022f

EU exports of dairy products (in milk equivalent) in % of EU Milk production

Source : DG AGRI Medium Term Outlook, Eurostat (Comext)

1. Milk quota system

2. International competitiveness

3. Internal market

10

Milk production below quota

11

113

879

113

876

114

244

114

061

114

765

114

574

115

462

115

851

115

948

122

651 13

2 60

2

132

825

135

047

135

191

134

464

137

623

140

480

139

669

100 000

105 000

110 000

115 000

120 000

125 000

130 000

135 000

140 000

145 000

150 000

155 000

160 000

95-9

6

96-9

7

97-9

8

98-9

9

99-0

0

00-0

1

01-0

2

02-0

3

03-0

4

04-0

5

05-0

6

06-0

7

07-0

8

08-0

9

09-1

0

10-1

1

11-1

2

12-1

3

13-1

4

14-1

5

1000

Ton

nes

Evolution of EU Milk deliveries and Direct sales versus quota

Fat correction

Total EU Direct Sales

Total EU Deliveries (not incl. fat correction)

Total Quota (Deliveries + Direct Sales)

Milk production versus quota in the various MS

12

+ 3

.6%

+ 0

.8%

+ 0

.4%

+ 0

.1%

+ 0

.1%

-0

.4%

-0

.4%

-2

.3%

-2

.9%

-3

.0%

-3

.6%

-3

.6%

-6

.5%

-7

.4%

-1

0.1

%

-1

1.7

%

-1

1.8

%

-1

3.8

%

-1

4.3

%

-1

7.5

%

-1

9.9

%

-2

1.0

%

-2

1.7

%

-2

3.7

%

-2

6.5

%

-4

7.3

%

-5

5.3

%

- 65%

- 60%

- 55%

- 50%

- 45%

- 40%

- 35%

- 30%

- 25%

- 20%

- 15%

- 10%

- 5%

- 0%

+ 5%

+ 10%AT CY DK PL DE NL IT LU ES IE BE LV EE FR SI CZ PT UK FI MT SK LT SE HU EL RO BG

in %

of A

vaila

ble

Qu

an

tity

EU Deliveries Overshoot/Under use (in % of quota)

2010/11

2011/12

2012/13

Milk production prospects versus quota

13

EU milk production

14

Cheese prospects

15

SMP prospects

16

Butter prospects

17

WMP prospects

18

CAP 2020 for milk political deal

1. Milk quota expiry on 31 March 2015 confirmed

2. Public intervention• for butter and SMP

• from 1 March until 31 September each year

• up to 50 000 t for butter at a fixed price of 221.75 €/100 kg

• up to 109 000 t for SMP at a fixed price of 169.80 €/100 kg

• Automatic tendering if and when ceilings reached

3. Private storage aid possible for butter, SMP and certain PDO/PGI cheeses, if necessary

4. Takeover of the Milk Package

5. Exceptional measures against market disturbance, animal diseases, loss of consumer confidence,

6. Minor unused schemes abolished (milk powder for feed and skimmed milk for casein)

7. Reformed direct payments (including possibility for coupled payments) & rural development policy

19

• No shocks expected in terms of production at the end of quotas in 2015

• Increasing share of EU milk exported

• Remain competitive at international level will be essential for internal market balance

20

Conclusions

Information on milk market:

http://ec.europa.eu/agriculture/milk/index_en.htm

PAC 2020:http://ec.europa.eu/agriculture/cap-post-2013/index_en.htm

Conference "The EU dairy sector: developing beyond 2015":

http://ec.europa.eu/agriculture/events/dairy-conference-2013_en.htm

Thank you for your attention !