Proposal for a COUNCIL REGULATION 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 the applicable quantitative limitation for buying-in skimmed milk powder
Date: 2016-06-10
Institutions: Directorate-General for Agriculture and Rural Development, European Commission
Subjects: aid to agriculture, common organisation of markets, intervention buying, intervention policy, production capacity, production quota, production refund, quantitative restriction, skimmed milk powder

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   EUROPEAN COMMISSION  Brussels, 10.6.2016  COM(2016) 384 final 2016/0181 (NLE)   Proposal for a COUNCIL REGULATION 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 the applicable quantitative limitation for buying-in skimmed milk powder  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

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, the main world importer of dairy products. At the same time milk supply 
has generally increased in the main exporting regions. 

Milk  production  is  particularly  increasing  in  the  Union  as  investments  in  milk  production 
capacity were made 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 SMP in the Union have consequently declined in years 2014 and 2015, when they 
hit the public intervention price. Downward pressure is also observed on butter prices but they 
are still above the public intervention price. 

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. 

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, the Council decided to increase the quantitative limitations for buying-in butter 
and skimmed milk powder at fixed price in the year 2016. 

The  109  000  t  initial  quantitative  limitation  for  skimmed  milk  powder  was  reached  on  31 
March  2016.  A  tender  procedure  took  place  pending  the  above  mentioned  Council  decision 
and some 27 000 t skimmed milk powder were bought-in through that procedure. 

Since  the  resumption  of  buying-in  at  fixed  price  under  the  doubled  ceiling,  quantities  of 
skimmed  milk  powder  purchased  each  week  have  been  considerably  higher  than  at  the 
beginning of the year. In all likelihood, the new ceiling will be quickly reached. 

For  the  same  reason  as  the  initial  Council  decision,  it  is  therefore  appropriate  to  further 
increase the quantitative limitation for the buying-in of skimmed milk powder at fixed price. 
An  increase  of  the  quantitative  limitation  for  butter  is  not  necessary,  as  no  offer  has  been 
received so far for butter. 

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 
ceiling. 

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

• 

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. 

• 

N/A 

2. 

• 

Consistency with other Union policies 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Article 43(3) of the Treaty on the Functioning of the European Union. 

• 

Subsidiarity (for non-exclusive competence)  

The  proposal  falls  under  shared  competence  between  the  EU  and  the  Member  States  and 
complies with the subsidiarity principle. 

• 

Proportionality 

The proposal complies with the proportionality principle. 

Choice of the instrument 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Ex-post evaluations/fitness checks of existing legislation 

Stakeholder consultations 

Collection and use of expertise 

Impact assessment 

Regulatory fitness and simplification 

• 

N/A 

3. 

• 

N/A 

• 

N/A 

• 

N/A 

• 

N/A 

• 

N/A 

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Fundamental rights 

• 

N/A 

4. 

BUDGETARY IMPLICATIONS 

The  budgetary  impact  of  this  proposal  is  limited  to  the  price  difference  between  the  fixed 
price referred to Article 2 of Council Regulation (EU) No 1370/2013 and the price that would 
have  been  eventually  determined  under  a  tendering  procedure.  Under  current  circumstances 
(and based on past experiences), it is likely that the latter would have been set at a level close 
to the fixed price, so that the actual budgetary implication would be negligible. 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

Explanatory documents (for directives) 

Detailed explanation of the specific provisions of the proposal 

5. 

• 

N/A 

• 

N/A 

• 

N/A 

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2016/0181 (NLE) 

Proposal for a 

COUNCIL REGULATION 

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 the applicable quantitative limitation for buying-in skimmed milk powder 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 43(3) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

The milk and milk products sector is experiencing a prolonged period of severe market 
imbalance. While world import demand for milk and milk products remained overall 
stable in 2015 compared to 2014, production significantly increased in the Union and 
other main exporting regions. 

(2)  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 volumes produced in excess are processed 
into long term storable products such as butter and skimmed milk powder.  

(3) 

(4) 

(5) 

(6) 

1 

2 

Prices  of  skimmed  milk  powder  in  the  Union  have  consequently  declined  in  years 
2014 and 2015, when they hit the public intervention price. 
Article 3 of Council Regulation (EU) No 1370/20131 sets quantitative limitations for 
buying-in butter and skimmed milk powder at the fixed price referred to in Article 2 of 
that Regulation. 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. 

The  109  000  t  initial  quantitative  limitation  for  buying-in  skimmed  milk  powder  at 
fixed price set by Regulation (EU) No 1370/2013 was reached on 31 March 2016. 

In  order  to  help  the  milk  and  milk  products  sector  to  find  a  new  balance  under  the 
prevailing severe market situation, and to preserve confidence in the effectiveness of 
public  intervention  mechanism,  the  quantitative  limitations  for  buying-in  butter  and 
skimmed  milk  powder  at  fixed  price  were  doubled  for  the  year  2016  by  Council 
Regulation (EU) 2016/5912. 

Council Regulation (EU) No 1370/2013 of 16 December 2013 determining measures on fixing certain 
aids and refunds related to the common organisation of the markets in agricultural products (OJ L 346, 
20.12.2013, p. 12). 
Council  Regulation  (EU)  2016/591  of  15  April  2016  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  the  buying-in  of 
butter and skimmed milk powder (OJ L 103, 19.4.2016, p. 3). 

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(7) 

(8) 

(9) 

A tender procedure took place before the entry in force of Regulation (EU) 2016/591 
and 27 000 t skimmed milk powder were bought-in under that procedure. 

Since the resumption of buying-in at fixed price under the new quantitative limitation, 
quantities  of  skimmed  milk  powder  purchased  each  week  have  been  considerably 
higher  than  at  the  beginning  of  the  year.  It  is  therefore  expected  that  the  new 
quantitative limitation will be quickly reached. 

In the event that a tendering procedure is operated before the entry into force of this 
Regulation,  it  is  appropriate  to  ensure  that  possible  volumes  bought-in  under  that 
procedure are not taken into account to determine the available volumes for buying-in 
skimmed milk powder at fixed price in 2016. 

(10) 

In order to ensure that the temporary measure 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, 

HAS ADOPTED THIS REGULATION: 

Article 1 

In Article 3(1) of Regulation (EU) No 1370/2013, the second subparagraph is replaced by the 
following: 

'By way of derogation from the first subparagraph, in the year 2016, the quantitative 
limitations  for  buying-in  butter  and  skimmed  milk  powder  at  fixed  price  shall  be 
100 000 tonnes for butter and 350 000 tonnes for skimmed milk powder. In the event 
that  a  tendering  procedure  be  operated  before  [date  of  entry  into  force],  volumes 
bought-in  under  that  procedure  shall  not  be  deducted  from  those  quantitative 
limitations.'. 

This  Regulation  shall  enter  into  force  on  the  day  following  that  of  its  publication  in  the 
Official Journal of the European Union. 

Article 2 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, 

For the Council 
The President

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FINANCIAL STATEMENT 

1. 

BUDGET HEADING: 

05 02 12 02 

FS/16/CM/aj 2770087  
agri.ddg2.c.3(2016) 
2751015 
6.142.2016.1 

DATE: 11.05.2016 

APPROPRIATIONS: 
in EUR million 
17,0 

TITLE: 
Draft REGULATION OF THE COUNCIL amending Regulation (EU) No 1370/2013 determining 
measures on fixing certain aids and refunds to the common organisation of the markets in agricultural 
products, as regards the applicable quantitative limitation for buying-in skimmed milk powder 

LEGAL BASIS: 
Article 43 (3) of the Treaty on the Functioning of the European Union 

AIMS: 
This draft regulation increases the quantitative limitations for buying-in of skimmed milk powder at 
fixed price in the year 2016. 
FINANCIAL IMPLICATIONS 

12 MONTH 
PERIOD 

CURRENT 
FINANCIAL 
YEAR 
2016 
(EUR million) 
- 
- 

FOLLOWING 
FINANCIAL 
YEAR 
2017 
(EUR million) 
- 
- 

2. 

3. 

4. 

5. 

5.0 

CHARGED TO THE EU BUDGET 

EXPENDITURE 
- 
(REFUNDS/INTERVENTIONS) 
- 
- 

NATIONAL AUTHORITIES 
OTHER 

(EUR million) 
- 
- 

5.1  REVENUE 

OWN RESOURCES OF THE EU  

- 
(LEVIES/CUSTOMS DUTIES) 
NATIONAL 
- 

2018 

2019 

2020 

2021 

5.0.1  ESTIMATED EXPENDITURE 
5.1.1  ESTIMATED REVENUE 
5.2  METHOD OF CALCULATION: 
6.0  CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE 

RELEVANT CHAPTER OF THE CURRENT BUDGET? 

6.1  CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF 

THE CURRENT BUDGET? 

6.2  WILL A SUPPLEMENTARY BUDGET BE NECESSARY? 
6.3  WILL APPROPRIATIONS NEED TO BE ENTERED IN FUTURE BUDGETS? 
OBSERVATIONS: 

YES 

YES 

NO 

NO 

A further increase is proposed for the quantitative limitations for buying-in into public intervention at fixed 
price for skimmed milk powder (350 000 tonnes instead of 218 000 tonnes). There is a strong likelihood that the 
present limit will be reached and  buying-in would have to be carried out by way of a tendering procedure that 
would determine the maximum buying-in price. Past experiences with tendering suggest that buying-in prices 
determined as a result of a tendering procedure would be very close to the fixed intervention price,and therefore 
it is expected that the financial impact of the proposal is negligible compared to buying in through tender.  

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