WRITTEN QUESTION E-1098/01

by Hans-Peter Mayer (PPE-DE) and Emilia Müller (PPE-DE) to the Commission

(6 April 2001)

Subject: Subsidies for skimmed milk powder

Since the entry into force of Commission Regulation (EC) 2799/1999, liquid skimmed milk as opposed to skimmed milk powder is no longer subsidised as a feedstuff for fattening calves. This leads to the absurd situation that, while skimmed milk is subsidised for the production of skimmed milk powder, farmers who buy skimmed milk to feed their fattening calves no longer receive a subsidy.

1. Different treatment is being given to skimmed milk and skimmed milk powder, two products which are completely identical in nutritional terms. This rule leads to distortions of competition, because producers, who have changed to liquid skimmed milk, at considerable expense, are no longer competitive.

2. The production of skimmed milk powder involves a considerable consumption of fuel, mostly fossil fuel. This energy imbalance is not compensated for by the greater energy consumption needed for the transport of skimmed milk.

3. The water removed from the skimmed milk has to be purified, and yet farmers feeding it to their fattening calves add water again at a later stage.

4. The monitoring problem identified by the Court of Auditors in its Special Report 1/99 relates to skimmed milk powder as well as to skimmed milk.

Could the Commission please state its position on these points?

Answer given by Mr Fischler on behalf of the Commission

(3 September 2001)

The Commission's decision to end the subsidy scheme for skimmed milk used as animal feed should be seen against the background of the marginal impact of the scheme and the control problems relating to its implementation.

The quantities of skimmed milk subsidised under the scheme had declined substantially in recent years, from 628 000 tonnes in 1989 to 211 000 tonnes in 1999. The latter quantity represents less than 4 % of the total subsidised quantity of skimmed milk and skimmed milk powder used as animal feed and includes certain quantities of skimmed that could only be used as animal feed because of quality or compositional problems. The real market impact of the abolished aid scheme was therefore extremely marginal and could not justify maintaining the control and administrative efforts required for its continuation.

The reasons for this development are structural, linked to the fact that calf rearing became more and more concentrated in areas where a sufficient supply of skimmed milk was not guaranteed throughout the year. Against this background, there is reason to believe that investments to convert farms to this type of calf feeding were a fairly exceptional phenomenon in recent years and limited to very specific circumstances.

It is correct that the Court of Auditors special report No 1/99 identified monitoring problems in relation to both the use of skimmed milk and skimmed milk powder. However, in the case of skimmed milk powder these problems related to details of the control procedures that could be solved by minor adjustments to the rules governing the scheme. In the case of skimmed milk, the problems were of a structural nature and solving them would have required a major overhaul of the monitoring procedures and substantial additional control efforts by Member States. This could not be justified by the marginal impact of the scheme.

The energy balance of using either skimmed milk or skimmed milk powder as animal feed will differ from case to case, but the Commission agrees that using skimmed milk may ultimately result in less energy consumption. Therefore, in specific situations the savings on energy costs may result in making the use of skimmed milk economically attractive despite the loss of the subsidy. However, globally the energy argument cannot compensate for the overriding arguments in favour of suppressing the aid scheme as indicated above.