WRITTEN QUESTION E-1456/96 by Klaus Rehder (PSE) to the Commission (12 June 1996)

Subject: Savings in the EU budget for the milk products market

Over the past ten years expenditure in the EU's agricultural budget for milk products has decreased by 31%. Between January 1995 and April 1996 export refunds were cut by 12% for butter, by 34% for skimmed-milk powder, by 37% for Edam cheese and by 19% for Emmenthal cheese. The EU's 1997 preliminary draft budget, Guarantee Section, totals 3 738 million in the milk products sector, a saving of 11.1%.

1. To what are these cuts attributable

a. over the past ten years

b. between January 1995 and April 1996?

2. What were the specific reasons for reducing the preliminary draft budget for the finacial year 1997?

Answer given by Mr Fischler on behalf of the Commission (26 June 1996)

1. During the last ten years, the Commission has adjusted export refunds in the milk sector taking into account the market situation within the Community, the market situation in third countries and, as appropriate, the need to respect the minimum export prices fixed in the context of the General agreement on tariffs and trade (GATT) International dairy arrangement. The reductions which have occured since the beginning of 1995 have reflected, in particular, the strength of prices on the world market. In addition, the implementation of the new world trade arrangements agreed in the context of the Uruguay Round requires the Community to respect certain annual quantitative and financial ceilings for subsidized export, as from 1 July 1995. The need to ensure that the volume and value of export licences respect these limits has therefore been reflected in the Commission's policy on export refunds.

Within the limits imposed by the new world trade arrangements, the Commission continues to determine export refunds, taking into account the market situation internally and in third countries. It should be noted that, on this basis, it was decided at the end of April 1996 to increase the refunds for butter and butteroil by approximately 9%.

2. For the milk sector, the preliminary draft budget for 1997 foresees total credits of 3 738 MECU, a reduction of 466 MECU compared with the credits in the 1996 budget of 4 204 MECU. This reduction reflects the expectation that, compared to the assumptions underlying the 1996 budget, the markets for milk and milk products will be firmer in 1997, enabling rates of export refunds and of certain aids for the internal disposal of butter and skimmed milk to be fixed for 1997 at significantly lower levels than was initially foreseen for the 1996 budget. Moreover, the degressive nature of the annual ceilings for subsidized exports, agreed in the context of the Uruguay Round, requires a reduction in the quantities of certain milk products which may be exported in 1997 compared to 1996. This particularly concerns cheese and the group 'other milk products' which includes whole milk powder, condensed milk and fresh products.

It should be noted that already for 1996, the existence of a much more favourable market situation than was initially foreseen in the budget will mean that actual expenditure in the milk sector is now expected to be well below the initial budgetary credits of 4 204 MECU. This is reflected in the preliminary draft supplementary and amending budget which the Commission adopted on 5 June 1996.