Milk quotas (debate) 
President
The next item is the oral question to the Commission on milk quotas by Duarte Freitas, Carmen Fraga Estévez, Salvador Garriga Polledo, Esther Herranz García, Elisabeth Jeggle, Albert Jan Maat, Mairead McGuinness, Francisco José Millán Mon, James Nicholson, Neil Parish and Daniel Varela Suanzes-Carpegna, on behalf of the PPE-DE Group - B6-0444/2006).
Duarte Freitas
author. - (PT) Mr President, Commissioner, I should first like to thank the political group and the other groups for the interest that they have shown in this subject and that made it possible for this oral question to be put quickly onto the agenda. This level of interest is indicative of the importance and sensitivity of the issue of milk quotas.
Commissioner, you suggested at the informal Council meeting that the system of milk quotas appears increasingly outdated and that it should be questioned and examined in such a way that farmers can plan their lives over the long term. On 3 October, at the last meeting of the Committee on Agriculture and Rural Development, Mr Rasmussen, representing the Commission, confirmed that we would see changes following the CAP 2008-2009 health check, most probably a phasing out of the milk quota system before 2015, when the 2003 Agreement is due to expire. It was not Parliament that raised this issue now, but it is in Parliament that the issue must be clarified, because our voters are most concerned and are anxious to know what is going on.
The truth of the matter is that the market reacted to these statements immediately, and various organisations and political agents appeared in public to have their say on the future of milk quotas. Although the CAP health check cannot be viewed as a mid-term review, we are aware of the internal and external pressures to make changes that go beyond merely simplifying the processes. In the dairy sector, planning is done over the long term. As regards, on the one hand, quota acquisition and, on the other hand, genetic improvement, environmental obligations and investment in determining the quality of the milk fat and protein content produced by each cow per lactation, analysis is required every six to eight years. Accordingly, what politicians are saying today will have repercussions until 2014-2015.
As I come from a region in the Azores which accounts for 30% of Portuguese milk production, where milk is the main source of income and where there are no medium-term alternatives, I am particularly sensitive to these changes. It is therefore essential that we know whether or not the agreement must be complied with and whether any stringent mechanisms are to be put in place before or after 2015.
On the other hand, it is also crucial to state for political purposes that the EU will take into account the social and economic impact that changes of this nature could have on regions that depend on milk and, in particular, on regions in which there are no production alternatives. What we really need to know now, Commissioner, is whether the milk quota system will be maintained in its current form until 2015, so that the market and the producers can be kept fully informed.
Mariann Fischer Boel
Member of the Commission. Mr President, for the time being the quota system provides some kind of stability for the European market, allowing successful full implementation of the 2003 reform without undue disturbances. However, if the milk sector is to meet the challenge of competitiveness in the future and prosper in a more liberal world, the milk quota system will gradually become a less adequate instrument for achieving our goals. I have therefore decided that a debate on the future of the quota system should take place within the health check process in 2008.
The most promising long-term scenario for the European dairy sector is one without quotas. This would allow the more efficient producers to benefit from growing markets while avoiding the huge cost, especially for young farmers, of obtaining production rights. The value of the quota system varies tremendously between the Member States. Quota levels per Member State are fixed until 31 March 2015, as Mr Freitas rightly said. After that date, in the absence of a proposal from the Commission and a decision taken in the Council, the system of milk quotas will end. That is important. If no decision is taken, the system will expire on 31 March 2015. Were the Council to take a decision to continue the quota system after 2015, this should allow for a gradual transition from the current rules to a scenario without production limits.
It is in everybody's interest to have a soft landing in order to avoid disturbances to the sector. When I travel around the Member States and talk to farmers, they ask for predictability. We owe it to the farming sector to give them a clear signal, and not a last-minute one on 1 January 2015, as to whether the quota system is to continue or not. We need to provide this predictability, and in this scenario specific measures should perhaps be introduced during a transitional period in order to make the milk quota system much more flexible than it is today.
However, it is still too early to take the appropriate measures. We will all have a much clearer idea of the situation, and of the different options for change, once the dairy market outlook report is completed at the end of next year. That report will be presented to Parliament and the Council and will look at the overall objectives and results of the 2003 reform, namely market orientation, competitiveness and the sustainability of the CAP in political, environmental and economic and budgetary terms.
I hope we can have a solid discussion on the future and on how to provide this predictability, which I consider so important, not just for the younger generation but also for those already in business.
Elisabeth Jeggle
on behalf of the PPE-DE Group. - (DE) Mr President, Commissioner, many thanks to you for what you have said, but I also want to extend warm thanks to my colleague Mr Freitas for taking the initiative and putting this oral question. As you have already, and repeatedly, pointed out, Commissioner, the current state of affairs - that is to say, the decision to retain the quota until 31 March 2015 - and the question as to what will succeed it, is a cause of vigorous debate, particularly in certain regions that are, or believe themselves to be, dependent on milk and on the quotas.
It is good to hear a clear statement from you - as we indeed just have done - in which you give us the facts - namely, that the quota has been agreed on up to this point - and also tell us that we should have a debate in good time on what we propose to do about the situation. If we want to carry on having a quota, then the farmers must be aware of that and supportive of it, exactly in the same way as they have to be of the decision to abandon the system, as is in fact currently being envisaged.
The question then arises as to what instruments might be feasible in the current financial situation as a means of preparing for its abandonment; it may well be, for example, that an increase in the milk quota is under discussion, but I would venture to express doubt as to whether this is the right way of going about it. How are we dealing with the option for young farmers who need the security to plan ahead and who very probably ought not to be investing a great deal more money in quotas, but rather in restructuring for the sake of their own competitiveness?
How, too, are we to deal with areas that are nothing more than green spaces and need dairy farming if they are to be maintained as such? These are, in the main, areas with very beautiful and very interesting landscape, in which there are, as a rule, very few other ways available of earning a living, and so we must support them in this way.
Katerina Batzeli
on behalf of the PSE Group. - (EL) Mr President, I should like on behalf of my political group to thank the Group of the European Peoples Party (Christian Democrats) and European Democrats and Mr Freitas for his reflections on the question of the Commission statements on milk quotas.
Commissioner, I shall not refer to what we all know to be the importance of the milk sector in Europe at the level of production, employment, investments, foreign trade or food security. However, I would point out that any proposal to abolish or keep milk quotas must be studied promptly and carefully and an analysis must be made of its repercussions, firstly on rural incomes and the other sectors acutely affected, and on rural development itself. This analysis should include all the regions of the Union, as well as the peculiarities of milk production in some of them.
Commissioner, we cannot be in favour of controlling milk production after 2015 under the current preconditions, which often create oligopolies in the sector. It is a production model of the previous common agricultural policy philosophy. On the other hand, however, we cannot accept the liberalisation of milk production quotas from one day to the next before 2015. In this transitional period which we are going through, it is necessary to strengthen measures of transparency, efficacy and competitiveness of the sector in certain regions of the Community. Nor can we announce any review of any product within the framework of the health check in 2008-2009. If we want to believe that it is a health check, what we have is a simplification of the common agricultural policy.
I would like to put one question to you: is there any possibility of unbundling subsidies in 2007? How can this be combined with the liberalisation or maintenance of the quota system?
Commissioner, I know that you will submit an honest proposal as regards the limits, so as not to give rise to any insecurity among producers. I think that you have this political commitment, but above all it is the question of timely consultation with the European Parliament that will give competitiveness and a clear orientation to the sector.
Jan Mulder
on behalf of the ALDE Group. - (NL) Mr President, I too should like to start by thanking Mr Freitas for taking the initiative and raising this important topic this evening.
When talking about the milk quota, it is important to note that the situation when this quota was introduced back in 1984 was completely different from now. In 1984, there were large surpluses that could not be sold, and that is clearly no longer the case. The difference between the global market prices in 1984 and the price in the European Union was enormous, but it is now considerably less pronounced.
If EU prices approximate to those on the global market, there is far less reason to have a quota system than there was in 1984. I am in complete agreement with the Commissioner's statement a moment ago to the effect that it is important for farmers to know where they stand. I do not know when the Commission will be able to indicate the proposals or direction in detail, but it would be ideal, in the framework of the health check, to also address all other components of agricultural policy and also to hear the Commission's view on the quota system.
The situation in the European Union is not - as somebody has already mentioned - the same everywhere. When the Commission presents this analysis, it is important that this is done on a country-by-country, and perhaps even region-by-region basis. For some regions, it is important that a quota system remains in place. Would the Commission address this aspect during the analysis? Whatever the outcome, on the basis of current knowledge, I think it would be preferable to phase out the quota system over a period of time. After all, if we compare the EU's presence in terms of dairy products within the global market today to that in 1984, the situation is now considerably worse, and that is much to be regretted.
Ilda Figueiredo
on behalf of the GUE/NGL Group. - (PT) Mr President, the Commissioner's position on the milk quota system is most worrying, in that she is suggesting that they might be dismantled by 2015.
Although she says that it is too early to take substantive measures, the path to liberalisation to which she refers overlooks the importance of milk production in various disadvantaged farming areas. For example, in Portugal, both in the North and Central Regions of the mainland and in the Autonomous Region of the Azores, any dismantling of the milk quota system would hinder rural development and would impoverish vast areas in which the production of milk and other dairy production is the main activity.
We therefore emphasise the need to protect the specific characteristics of farming in various Member States and, in particular, in Portugal.
Janusz Wojciechowski
on behalf of the UEN Group. - (PL) Mr President, I would like to thank the author of the question for initiating this greatly needed debate on dairy quotas. The problems associated with these quotas are a concern for farmers throughout Europe. I would like to make the point that if these quotas are to be maintained for a longer period, it raises the obvious question of how high they should be, because the sizes of milk quotas are blatantly unjust: I can cite many examples of how they do not conform to market demand in particular Member States. There are countries which are greatly damaged by quotas not being in line with their demand as consumers. Examples are Italy and Spain, while Poland, a new Member State, is definitely another one. For that reason, if the quotas need to be retained, then the size of these quotas must be reviewed for the sake of fairness and European solidarity.
Kathy Sinnott
on behalf of the IND/DEM Group. - Mr President, since we are on the subject of milk quotas, I want to bring a serious situation to the Commissioner's attention. The Irish milk quota sellers' group, whose members are all older farmers, all hold milk quotas which they wish to sell. Their decision to sell the quotas is based on illness, infirmity or old age.
The Irish Minister for Agriculture has stipulated that she will prioritise in favour of young farmers. European law prohibits discrimination on the grounds of age, yet our Minister is openly discriminating against older quota owners in favour of young farmers to whom she wishes to give quota - and this is the key - at below market value. She proposes to take the cost out of present quota owners' pockets. This is interfering with the market. Many of these older farmers are at present subject to scaremongering, with inaccurate information from their cooperatives.
The Minister intends to confiscate quotas not offered for sale on two bases: if the quota owner does not produce for two consecutive years or if the quota owner has a leasing arrangement which expires in March one year and he does not sell his quota by the end of March the following year.
Minister Coughlan appears to want to divide the traditionally cohesive farming community by the exploitation of one group by another. The threat to confiscate quota is an attempt to pressure farmers into poor arrangements and to sell against their will. I ask the Commissioner to clarify this situation.
Albert Jan Maat
(NL) Mr President, I should like to thank Mr Freitas for the way in which he has presented the European Christian Democrats' initiative, and the Commissioner for opening the debate on the future of dairy products. Let us be honest: the situation has changed over the years; high quota costs have caused the cost of milking to soar, while European dairy policy is increasingly becoming snarled up. We have now lost 60% of our exports within the global market, and the European Union and the European dairy sector have lost 4% of world production.
Since current demand for dairy products by far outstrips production globally, Europe would do well to face the facts and ponder the question what to do after 2015. On the one hand there are the entrepreneurs who would like to grow but are crippled by the high quota costs. On the other hand there are areas in Europe where the quotas are currently no longer being achieved, the United Kingdom being a case in point. There is therefore every reason to look at how we can come up with a good timetable after 2015 in order to attain a better and effective system. I should like to make a few suggestions in this respect.
First of all, milk quotas must become tradable internationally. The superlevy must be lowered when the quota is being used but when sales are done with virtually no support to the European Union. We could also consider levelling the milk quota at European level. When one country does not manage to fill the entire quota and another country could do with some more, we could quite simply even the matter out afterwards. A gradual quota increase for dairy farmers and cooperatives who sell their products without European support is also conceivable.
Finally, we advocate an effective use of European funds for rural development in those areas where small dairy farmers face problems in terms of employment and conversion. In that way, the Commissioner may well be able to use a good timetable that leads to a more market-oriented focus and, as a member of the Dutch Christian Democratic party, the CDA, I would very much welcome it if the Commissioner were to adopt this line. I have to congratulate her, also because a number of these proposals have already been expressed by Mr Rasmussen, Head of Section for Milk and Animal Products in DG Agriculture. This bodes well for the future in terms of a timely debate on dairy products.
Rosa Miguélez Ramos
(ES) Mr President, Commissioner, the mid-term reform of the CAP was announced as simply an intermediary review, but despite this it has been one of the most significant reforms that the policy has undergone since it began.
Given this history and the public statements that you have been making regarding the quota system in recent months that have generated a significant amount of alarm and uncertainty in the sector, I would like you to make it perfectly clear that the check-up planned for 2008 will assure us that the reform is working and that under no circumstances does the Commission intend to go further, or move forward to the date with regard to which Parliament gave its opinion in the debates on the last reform. I would like to remind you that it was in favour of extending the current rules to the 2014-2015 financial year, in accordance with the Commission's proposal. Other colleagues have said the same thing.
This prospect of stability, Commissioner, which the Commission proposed at that time, remains essential for an economic activity which, like any other, needs to make plans, make investments, pay and prepare for what the future may bring, with a previously established regulatory framework.
In my region, Galicia, as in others that have been mentioned, such as the Autonomous Region of the Azores or Northern Portugal (and I would like to thank Mr Freitas whose question made this debate possible), farms play a decisive role both in social and environmental terms and also in restoring territorial balance.
Agricultural unions maintain that it is the Galician model, based on family farms, that is the clearest demonstration of the multifunctional role of these types of farm and their capacity to tie people to the region.
If the Commission wants to change the rules of the game, it should first explain what it plans to do, when and how it is going to do it. This should all be done with maximum transparency, because uncertainty, Commissioner, is the worst scenario for those working in the sector.
The sector needs stability and not shocks, time to adapt itself and to plan, and I therefore think that we should finish applying the current reform before thinking about the next one.
Kyösti Virrankoski
(FI) Mr President, milk production is a typical feature of the worst off farming regions. It has provided a livelihood and has been a vital force in regions where other areas of agricultural production would be difficult or impossible. It has been able to make use of good levels of coarse fodder productivity in areas that are infertile, for example.
Milk production is capital-intensive. The investment needed is massive. The modern production structure can cost up to a million euros. It only normally creates jobs, however, for family farms.
Milk production is subject to quotas. Many young farmers have made huge investments in acquiring additional production rights. It is not uncommon for production quotas to be bought for EUR 150 000 or more. Milk production therefore needs a long-term protected framework. That cannot be seen as an eight-year goal. What is a sound system has resulted in a balanced framework for the farmer in which to engage in production. Price fluctuations have been small and the market stable.
Abolishing milk quotas would alter the situation immediately. The large industrial concerns in Europe's best regions would be in a strong competitive position. Agricultural diversity would be all the poorer. Massive investments in milk quotas by family farms would immediately lose their value. The milk markets would lose their stability. All this would make the enterprise a very risky one and would have an adverse effect in particular on farming regions that are worse off in terms of their prevailing natural conditions.
Zdzisław Zbigniew Podkański
(PL) Mr President, the common agricultural policy has raised many doubts and will continue to do so. It will always have its supporters and its opponents.
The European Commission's intention to review the common agricultural policy, and with it milk quotas, has raised concerns as well as hope, especially in the countries that suffer from it, including Poland. The quota allocated to Poland was insultingly low. A case in point is Germany, which has 80 million inhabitants, and has a quota of around 28 million tonnes, while Poland, which has half the population, is only allowed some 9 million tonnes of milk. In practical terms that means Poland has a quota four and a half million tonnes less than the thirteen to thirteen and a half million tonnes it should be allowed.
The question we would therefore like to ask is what would happen if milk quotas were abolished, particularly in countries such as Poland, where family-owned farmsteads rather than big farms predominate? Would the change to the rules of the common agricultural policy not force these farms into bankruptcy?
Jan Tadeusz Masiel
(PL) Mr President, Commissioner, to me it is highly regrettable that the new Member States benefit the least from the common agricultural policy. They are participating in this 'Marshall Plan' for agriculture, whose great virtue used to be its long-term focus and vision. Well, we joined the European Union late. This is not the Commissioner's fault: such is the history of Europe. But unfortunately Polish farmers are still grappling with the milk quotas, which are several million tonnes too low, and in the meantime we pay fines for over-production of milk, when they are to be lifted in 2015. Unfortunately during that time many Polish milk producers will disappear from the market.
Carmen Fraga Estévez
(ES) Mr President, Commissioner, as a representative of Galicia, a milk-producing region par excellence, I think that this oral question put to the European Commission today is very opportune.
Commissioner, producers are quite disconcerted by information that has been circulated, from which it can be deduced that there will be changes to the system established in 2003 for the milk sector and specifically concerning the quota system.
You were not very specific today, Commissioner, but I think that you made a series of things clear: that you are going to launch a debate, that there is going to be a transition period prior to the removal of quotas in 2015, from which I deduce that there is going to be a phasing out period prior to 2015 when quotas are permanently removed.
Commissioner, we are talking about an economic sector that needs legal security and medium- and long-term guarantees that will enable a minimum degree of planning, and any further change or uncertainty could, at least in my country, have serious social and economic consequences.
Quotas are a very important asset to farmers. In a region like Galicia, in which there is a need to continue with the restructuring process, it is essential, in order to complete it, that the current quota system is maintained as planned. If not, the consequences could be catastrophic, as removing quotas would have drastic repercussions for the price of milk, and consequently for profits in the dairy sector.
I therefore ask, Commissioner, that any transitions be made and ideas proposed from 2015 onwards.
Finally, I would like to take this opportunity to highlight the fact that the policies of the Member States need to cooperate in the whole of this process and that therefore any restriction on exchanges of quotas in a Member State should be considered as a serious obstacle to the capitalisation, competitiveness and development of the sector, as is unfortunately the case with the national plan proposed by the Spanish Government.
Luis Manuel Capoulas Santos
(PT) I should once again like to thank you for being in the Chamber, Commissioner. Your frequent attendance in Strasbourg is ample demonstration of the continued importance of farming in Europe.
We have been considering the common agricultural policy. My group, the Socialist Group in the European Parliament, held an important seminar just last week in Brussels on the theme of the CAP as it is and of the CAP as we would like it to be. Reflection on the future does not necessarily mean introducing any element of instability. Farmers work with nature and value nature's cycles, and markets, as we know, react to all elements of instability. That being said, instability does at least rule out inertia, and we must not therefore fall into the old trap of defending the status quo simply for the sake of it.
Commissioner, the latest statements coming from some quarters have, then, given rise to extraordinary alarm in the sector, to which an appropriate political response needs to be given so that the instability felt by the sector on this matter is not in some cases exploited in the service of untoward political objectives. Instability and insecurity can only be tackled by providing regular, transparent information that is as clear as possible.
I would therefore call on you to adopt as effective as possible a strategy of clarification for the sector and also to make it clear to the sector that the Commission honours its agreements and the arrangements fixed until 2014. These arrangements must naturally be fulfilled without prejudice to the debate and without prejudice to the examination of alternative arrangements that may prove appropriate.
James Nicholson
Mr President, Commissioner, the ability to have a clear and certain future is very important for any business, none more so than for dairy farmers and for the dairy industry. Quotas are in place until 2015 and this I believe was a good decision during the mid-term review. But to now cast doubt on this on the part of the Commission sends the wrong message and I am pleased that the Commissioner went some way tonight to assure us of what the Commission's position is.
Commissioner, you said that quotas have outlived their usefulness. Well, OK, you may be right, but I have to say to you that 2015 is a long time away and it is very difficult to crystal-ball gaze and see what conditions will be like at that time. In 2015, you rightly say, we should have a soft landing and when the time comes for quotas to disappear I think that soft landing should come into place. What I question is the timing. So far from the date, by all means let us have an exchange of views on what may or may not happen, but how do we encourage our young people to go into the industry? How do we take young farmers into the industry? How do they plan for the future if the future is being questioned at this moment in time?
The dairy sector, as you know only too well, is the backbone of the agricultural industry throughout the European Union. We must work together to achieve a sound future for that industry. Only by working together can we achieve that sound future. I hope that you will take the opportunity to engage with us in the Committee on Agriculture and positively and actively be involved in ensuring that there is a future for the dairy sector, for dairy farmers and for the dairy industry. It is not only the people who are employed on the farms who are important; the people who are employed in the processing industries and off the farms are equally important.
Salvador Garriga Polledo
(ES) Mr President, Commissioner, we all agree that the European countryside and European farmers and livestock breeders need some certainty. The Brussels Agreement in 2002 provided that certainty, and in exchange for it, the Member States tolerated a reform of the CAP that required serious sacrifices for the rural world, especially for the 'cohesion countries'.
This certainty meant, among other things, that the system of milk quotas would remain in force until 2015, allowing farmers sufficient time to reorganise their farms in order to make them more competitive and, if necessary, to leave the sector.
But we want the certainties to be maintained, and you know that quotas are the only guarantee for farmers in a market in which prices are falling. And quotas are an asset for farmers, who need to have the freedom to transfer and sell them when they want to cease production. What uncertainty does, Commissioner, is reduce the value of quotas.
In my region, Asturias, 94 000 tonnes have been lost in two years due to farmers giving up. Between 1996 and 2006 the number of farms has dropped from 30 000 to just 3 200. Young farmers, who we all talk about so much, including young farmers with high milk quotas and profitable farms, are leaving the sector. The Government has also forbidden transfers of quotas between individuals.
Our problem, Commissioner, is rural development. You are going to do a health check on the common agricultural policy next year. We hope that you will be acting as a doctor and not as a forensic scientist.
Do you think it is right to talk about transitional measures when there is not even sufficient funding secured for rural development? I would like to remind you that, for example, my country is going to lose 50% of rural development funds in the next few years. Are you planning to report this situation during the review that you carry out next year?
Czesław Adam Siekierski
(PL) Mr President, the debate in this House on dairy quotas is intensifying. We are all wondering what will happen if we end the quota system for milk production. There has been a great deal of criticism which focuses on the fact that the current system is an archaic one which inhibits the development of the dairy sector and makes it less competitive on the world market.
Ending the system is opposed by the countries which have unfavourable natural conditions for dairy production. To them, ending the system will mean that production will shift to other regions, leading to loss of livelihoods and stable incomes for many farmers. This may also affect the least developed regions in the east of Poland, Poland being one of the countries that was allocated an unfair, extremely low milk quota. We may soon become net importers.
According to some experts, the negative impact of a rigid quota system will be worse for Poland than for other Member States, because all the system does is restrict opportunities for modernisation and utilising production potential because of the low level of aid for the milk sector in the European Union. Many people assert that the milk quotas have lost their economic raison d'etre. We are also in negotiations with the WTO, in which we have promised to eliminate export subsidies and greatly reduce the tariffs set up to protect the internal market.
How will this affect the EU milk market? It appears that limiting the restrictiveness of the system, for instance, by combining wholesale and direct quotas and restricting the penalties for exceeding the limits would be fair at this moment. I would like to remind the Commissioner that there are some countries which are not currently using their quotas to the full.
Mairead McGuinness
Mr President, in Ireland they speak of little else. I spoke to a large group of dairy farmers in Navan, County Meath on Thursday night and the question they are asking is not so much if quotas will be gone in 2015, but what is going to be done from 2008 to collapse the value of the milk quota.
I am indebted to last Thursday's edition of the Farmers' Journal for outlining five key points that the Commission has in mind. It is well worth bringing them to the attention of the House. I believe you are looking at gradually increasing quotas from the health check onwards, reducing super-levy costs to Member States, balancing quotas across the European Union so that an over-quota in one Member State may be taken up by slack in another. Cross-border trading is on the table, as is reducing the value of quotas in Member States. That is already happening, certainly in Ireland.
There is a downside to all of this. Every single study that I have read on the subject says that the abolition of milk quotas will lead to a substantial drop in milk prices in many Member States and there will be a corresponding increase in production. That would happen in Ireland, the Netherlands, Denmark and Luxembourg.
The key to all this is that we are all for abolition if markets are positive in 2015, but none of us knows what the markets will be like at that time. I look forward to your analysis of the dairy market. It will have to take a very close look at the future, because if global markets are not positive I cannot recommend to farmers that they run faster to stand still. It makes no sense.
To those who have concerns about young farmers - and I have many myself, although my little farmers are quite small at the moment! - who would encourage anyone to go into a business where they have to work twice as hard to earn half as much money? It does not make sense. We need to bear that in mind.
The key is the WTO and what happens there. But at least we are having a debate and that is a positive sign. We should discuss these things more in this House, rather than reading about them in our national newspapers.
Neil Parish
Mr President, I wish to thank Mr Freitas for bringing this forward and the Commissioner for being here tonight, because this debate is really worthwhile.
We have to face up to the fact that, as milk quotas and set-aside do not fit easily into a decoupled agricultural policy, they will have to be phased out in the future. We must also set a date and stick to it, because ever since I have been here quotas have been about to be phased out, and it has never happened. We must face the reality that one day they actually will go. Everyone in this House accepts the value of dairy production to all our Member States - nowhere more so than in my own region of the UK, the West Country, where dairying is the bread and butter of the whole area but is also under huge pressure. What is interesting about quota and the value of quota is that ten years ago in the United Kingdom the rate was nearly a pound a litre, whereas now it is worth a penny a litre. We must therefore remember that in many ways quota is not a tangible substance, and its value can disappear overnight. We have to be very careful about how we deal with this. In the UK, it is the power of the supermarkets and the driving-down of prices which is now the real problem. We are not even meeting our national quota, which shows there is a problem with price.
At certain points over the last 20 years there has been a world increase in dairy trade, but because in Europe control is exercised over the amounts produced, it has never been able to take advantage of this. We therefore need to have a more flexible regime in the future. I should like to hear the Commissioner's views on that.
New Zealand - which probably produces milk as effectively as anybody - still has a form of quota, because it has a national cooperative, of which farmers have to be shareholders in order to be able produce extra milk. It is interesting to explore the arrangements beyond 2015, but first we must face up to the reality that quotas need to go.
Duarte Freitas
author. - (PT) Mr President, thank you very much. As author of the question, I should very quickly like to ask the Commissioner a specific question, so that we can all leave the House with this issue clearer in our minds.
We know, as the Commissioner said, that, if nothing is done, the arrangements will end in 2005. We also know that, in the view of the Commissioner herself, this is an outdated system that must be brought to an end. What we want to know now, and this is the question that I should like to ask you, Commissioner, and that I want you to answer very, very clearly - is whether you accept that phasing out can begin before 2015, as Mr Rasmussen, your representative in Parliament's Committee on Agriculture, assumed it could, or whether the process will begin from 2015 onwards. This is a crucial question to which I should like you to give me a very clear answer.
Mariann Fischer Boel
Member of the Commission. Mr President, I have listened with great interest to this interesting and very passionate debate. It reflects perfectly the importance of the dairy sector.
As Mr Mulder rightly said, the quota system was introduced in 1984 at a time when we wanted to maintain high prices for our products. At that stage, therefore, the quota system was a good idea. However, things have changed dramatically over the last 20 years and there was therefore a discussion, as part of the 2003 reform, on what to do with the dairy sector. The decision was taken to maintain the quota system until 31 March 2015. It was decided to increase quotas and reduce prices. The phasing-in of these changes will be finalised next year.
Then there was the possibility of this health check. There is not going to be a new reform in 2008/2009. That is important. The health check simply provides an opportunity to streamline and simplify the common agricultural policy, in line with the 2003 CAP reform.
In my dealings with Parliament I always try to play with a very open hand. I do not keep my cards close to my chest. We need to have a discussion, as part of the health check, on what we do with the quota system when it expires in 2015. I have no fixed ideas on phasing-out, but we need to tell the dairy sector whether or not we want to prolong the quota system. I am not proposing any changes, as the quota system will expire in 2015 if we do not do anything, but we must therefore tell the sector whether or not we are sticking to the agreement to abolish the quota system in 2015. If we say nothing, farmers all over Europe will assume that this will not happen. They will keep their quotas on the basis of these still being worth something after 31 March 2015, only for the Council and Parliament to suddenly decide to abolish them, with the value of quotas falling to zero overnight. They will be worth absolutely nothing! That is not predictability, and we must therefore send a clear signal of what the future will be.
As I said in my first contribution, we will have this dairy market outlook report at the end of next year. I have a tradition, Mr Nicholson, of working closely with Parliament, and specifically with the Committee on Agriculture and Rural Development, so at that point we can discuss what is going to happen, in order to provide stability and avoid uncertainty for the dairy sector in the European Union.
President
The debate is closed.
Written statement (Rule 142 of the Rules of Procedure)
Béla Glattfelder
(HU) In recent times, several reports have been circulating to the effect that the Commission is preparing to reform the organisation of the milk market, an important element of which would be the abolition of milk quotas. The Commission has not denied these reports. This news is unsettling if only because, in recent years, reform has been undertaken primarily in those sectors in which the system would in any case have ceased to be in force. There is no such compelling reason in the case of the milk sector, since the regulations for this sector are in force until 2015 and, moreover, the quota system has been providing the market and producers with adequate stability.
Should the quota system be abolished, the income of dairy producers would fall across Europe, leading to further concentration in the sector. Tens of thousands of farmers producing for the local markets would be obliged to stop production. As a result, those Member States in which conditions are less favourable would see their milk production fall significantly. This would oblige several Member States to supply their dairy needs predominantly from imports.
Although in Hungary milk production is primarily in the hands of large-scale industries and is competitive, nevertheless it would not be in the interests of our country either to abolish the quota system. Because of current economic difficulties, milk consumption is low, and Hungary is not able to take advantage of the quotas allocated to it. At the same time, however, we hope that if the economy picks up then consumption will also rise. Therefore, Hungary would find particularly unacceptable any transformation of the quota system that involved transferring the quotas of Member States that make less use of them to those countries that make greater use of them.
Csaba Sándor Tabajdi
(HU) The reason for maintaining the strict milk quota system is that the quotas that are presently in effect allow for a greater volume of milk production than what the EU consumes internally.
From 2007 on, direct payments to milk producers have to be kept completely separate from production, that is, payments will be received not by the milk producer but by the one who owns a milk quota during the reference period, in the form of a lump sum based on land area.
Under current rules, the milk quota system will remain in force until 2014-15. Commissioner Fischer Boel stated that in the context of the review, we should look at the question of quotas, but she did not give any concrete details.
Maintaining the quota system is the sole guarantee of market and price stability. Without quotas, production would rise significantly, and the resulting surpluses would bring down prices, which would very easily stifle small producers. At the same time, without support only the most competitive industries would be able to compete with the pressure from imports or to succeed on the export market.
In Hungary, milk production is steadily declining due to problems of efficiency; in spite of the fact that purchase prices are not falling, we are using only around 70% of the Community quota allocated to us. Unfortunately, in contrast to Western European practice, producers here do not own the processing establishments.
If the quota system were abolished, the proportion of imported products would rise, making the problems of competitiveness among Hungarian producers even more evident, and the fall in domestic production would probably accelerate. For all these reasons, I do not support the abolition of the milk quota system.
