WRITTEN QUESTION P-2655/96 by Reimer Böge (PPE) to the Commission (8 October 1996)

Subject: The Commission's management of the market in the milk sector

For the second year in succession, the Commission is linking the implementation of the results of the Uruguay Round in the agricultural sector extremely closely to the granting of export licences and the fixing of export refund levels for those products. Over the last few weeks this has led once again to severe fluctuations in the milk sector, which are detrimental to a consistent export policy and the stabilization of the domestic market. Market pressure on the European milk market could be avoided if a more efficient system of fixing export refund levels was adopted. The latitude allowed under the GATT agreements should be fully exploited. Care should be taken to ensure that the permitted subsidized exports of butter and skimmed milk powder actually take place.

The implementation of the GATT decisions is placing considerable strain on the market in cheese. Export ceilings have been set. Over the past few weeks, export refunds for cheese have been reduced on several occasions. At present,a higher export refund is payable for feta cheese falling under subheading 0406 90 33 919 (ECU 59.74 per 100 kg) than for the export of Edam cheese falling under subheading 0406 90 23 900 to Eastern Europe (ECU 48.04 per 100 kg). Yet a kilo of exported Edam cheese contains the equivalent of more than twice as much milk as a kilo of feta destined for Iran.

1. Could the Commission explain why it gives particular support to the export of varieties of cheese that do not have a high milk content?

2. Does the Commission see the connection between the current policy on export refunds and licences and falling producer prices in the main EU producer countries?

Answer given by Mr Fischler on behalf of the Commission (30 October 1996)

The Commission most certainly does not give particular support to exports of cheeses with a high water content. On the contrary, it has raised the minimum price for cheeses qualifying for refunds by ECU 50 (i.e. from ECU 180 to 230 per 100 kg) thereby excluding low-value cheeses or, in other words, those with a high water content. What is more, subsidised exports of Feta of all types are monitored particularly carefully because the aim is to reduce the volume by a quarter each year.

Equally, refunds on cheese exports to Eastern Europe and the Community of Independent States have been reduced in order to prevent a sudden, harmful rise in such exports endangering those to traditional markets. Although it is true to say that this geographical differentiation of refunds applied initially to a limited range of cheeses only, the Commission has since extended the differentiation to all types of cheese, thereby establishing a better balance between those mentioned by the Honourable Member. The producer price for milk is by no means determined solely by changes in refunds. The main factor is the overall balance between supply and demand across all markets. Milk production significantly in excess of quotas has had a negative effect on this balance and is therefore forcing milk prices down in some Member States.