WRITTEN QUESTION P-0601/03

by Ilda Figueiredo (GUE/NGL) to the Commission

(25 February 2003)

Subject: COM for the dairy sector and the additional levy for Portugal

The current marketing year for milk ends in March. As things stand, almost 20 000 Portuguese producers may have to pay fines for exceeding their individual quotas. It appears that the Portuguese milk quota may be exceeded by between 40 000 and 50 000 tonnes, implying a fine of 37 cents per litre, which gives a total of EUR 15 million. Estimates from the Portuguese sector indicate that, if this fine were to be applied and bearing in mind the large debts incurred by many producers, it could lead to the disappearance of 30 % of producers in the Douro-Minho region alone. It should be pointed out in this connection that 78 % of producers have ceased production

over the past decade between the 1991/92 and 2001/02 marketing years, i.e. 75 000 producers have left the industry, 20 000 of them between 1999 and 2002, most of them being small and medium-sized producers in inland regions or regions facing particular difficulties such as mountain regions. This development is chiefly due to the increase in intensification, concentration and verticalisation of milk production in Portugal. Price policy, the buying-up of quotas from small producers, transfers of quotas without land, and the scrapping of shared milking parlours, collection points and stock-management bodies have also caused serious difficulties across much of the EU. Moreover, the reform of the COM as part of Agenda 2000 failed to take account of this situation and maintained an unfair quota for Portugal, which was based on historical production and productivity levels without considering factors such as the number of farms, self-supply and the sector's importance in the least-favoured regions. This was a reform aimed at cutting farm prices with partial compensation in the form of direct aid (around 80 %), mainly based on national aid to be allocated with reference only to the scale of production in each country, without taking account of other factors linked to economic and social cohesion. Furthermore, the calculation method used, the famous virtual cow, penalised farmers and countries with a lower level of productivity.

The Commission:

- what measures will it adopt to take account of the specific characteristics of Portuguese farming and prevent the enormous socio-economic consequences which the additional levy would have, particularly for less-favoured regions? Does it not consider that the Portuguese quota should be increased so as to reflect current productivity levels, as well as the degree of self-supply and economic and social cohesion;

- does it not consider that the proposed mid-term review will merely help to accentuate current trends in the sector? What steps will it take to guarantee balanced milk production throughout EU territory, including inland and mountain regions, with the goal of maintaining a dense network of small and medium-sized farms?

Answer given by Mr Fischler on behalf of the Commission

(20 March 2003)

The Commission does not share the Honourable Member's opinion on milk production in Portugal for the following reasons:

- From the outset, quotas were set with reference to production and not to consumption. In 1986 Portugal was permitted not to start applying quotas until 1992. Moreover, they were set at approximately 160 % of production at the time of accession. Continuously increasing from 1986 onwards, Portuguese milk production has reached and exceeded the quota since 1999/2000.

- Even if the consumption criterion had to be taken into account when setting the quota, this argument is not relevant to Portugal: the fact that intervention for butter is now permanent in Portugal and exceeds 5 % of production shows that there are already structural surpluses in the dairy sector.

- The disappearance of many very small milk producers in Portugal is not accidental: it has been encouraged and financed by Community and national programmes and funds in order to enable restructuring of the sector. Moreover, in all Member States the number of milk producers has fallen while productivity has risen.

- Milk quotas were introduced primarily in order to limit supply and to guarantee adequate production prices. They have proved highly effective in this respect wherever they have been applied correctly.

- When Agenda 2000 was adopted, Portugal had not yet reached its quota once; hence there was no reason to consider exemptions from the general rule. Moreover, there is no longer a virtual cow in the final text. In the draft reform of the common agricultural policy (CAP) currently under discussion, Portugal receives the same cautious quota increases as the other Member States many of which would have grounds for wishing to produce more milk.

The answer to the questions put is therefore:

- The Commission cannot propose an exemption from payment of the levy, either for Portugal or for any other Member State. To do so would open the way to a price collapse and distort competition with producers who have complied with their quota.

- The reform currently under discussion does not in principle change the conditions in this respect: quotas will still not be able to circulate from one Member State to another, and their allocation among regions and producers will remain a national responsibility based on general criteria established in the Community rules.