amending Regulation (EU) No 1370/2013 determining measures on fixing certain aids and refunds related to the common organisation of the markets in agricultural products, as regards applicable quantitative limitations for buying-in butter and skimmed milk powder

EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

1.1.Reasons for and objectives of the proposal

The milk and milk products sector is experiencing a prolonged period of severe market imbalance. Global demand for milk and milk products has deteriorated in the course of 2015, notably due to the introduction and prolongation of the Russian import ban and the weakening of imports in China (main world importer of dairy products). At the same time milk supply has generally increased in the main exporting regions.

Milk production in the Union is steadily increasing as investments in milk production capacity were made in the Union in view of milk quota expiry and positive medium term prospects on the world market. Milk deliveries in the Union increased by 2.5% in 2015, representing more than 3.5 million tonnes of raw milk in addition. Milk volumes produced in excess have to be processed into long term storable products such as butter and skimmed milk powder (SMP). Indeed, production increased by 8.1% for SMP and by 4.7% for butter in 2015. DG AGRI estimates point to a further increase by 1.4% of EU milk deliveries in 2016.

Prices of butter and SMP in the Union have consequently declined in years 2014 and 2015, when skimmed milk powder prices hit the public intervention price. Butter prices are still above the public intervention price but under downward pressure .

Article 3 of Council Regulation (EU) No 1370/2013 sets quantitative limitations for buying-in butter and skimmed milk powder at the fixed price referred to in Article 2 of the same Regulation (50 000 tonnes for butter and 109 000 tonnes for SMP). Once those limits are reached, buying-in is to be carried out by way of a tendering procedure to determine the maximum buying-in price.

Commission Delegated Regulation (EU) 2015/1549 advanced the public intervention period for butter and skimmed milk powder in 2016 to 1 January, as an exceptional measure to secure the undisrupted availability of the public intervention mechanism in a situation of market disturbance in the milk and milk products sector.

In the additional public intervention period opened by Commission Delegated Regulation (EU) 2015/1549 for year 2016 (January-February 2016), 54 522 tonnes of SMP have been offered, meaning half of the quantitative limitation set for buying-in at fixed price by Council Regulation (EU) No 1370/2013.

In order to help the milk and milk products sector find a new balance under the prevailing severe market situation, and preserve confidence in the effectiveness of intervention mechanisms, it is appropriate to increase the quantitative limitations for buying-in butter and skimmed milk powder at fixed price in the year 2016.

As it is possible that, by the time this Regulation enters into force, a tendering procedure for buying-in might have been automatically triggered, it is necessary not to take into account the volumes bought-in under that procedure so that they are not deducted from the new available ceilings.

In order to ensure that the temporary measures provided for in this Regulation have an immediate impact on the market and contribute to stabilise prices, this Regulation should enter into force on the day following that of its publication.

1.2.Consistency with existing policy provisions in the policy area

This proposal is consistent with the spirit of the common organisation of the markets in agricultural products, aiming at stabilising markets and ensuring a fair standard of living for the agricultural community.

The proposal is consistent with Article 43(3) of the TFEU by which the Council, on a proposal from the Commission, shall adopt measures on fixing prices, levies, aid and quantitative limitations and on the fixing and allocation of fishing opportunities.

1.3.Consistency with other Union policies

N/A

2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

2.1.Legal basis