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 quantitative limitation for buying-in skimmed milk powder
Date: 2017-11-24
Institutions: Directorate-General for Agriculture and Rural Development, European Commission
Subjects: aid to agriculture, derogation from EU law, imposed price, intervention buying, intervention stock, quantitative restriction, skimmed milk powder

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 24.11.2017  COM(2017) 692 final 2017/0310 (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 quantitative limitation for buying-in skimmed milk powder  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

Close  to  400  000  t  skimmed  milk  powder  (SMP)  are  currently  held  in  public  stocks.  This 
volume is  equivalent  to one third  of total world trade  in  SMP in  the first half of 2017. The 
mere existence of these stocks is weighing on the market. 

The  fat-protein  price  gap  is  wider  than  ever,  as  reported  by  the  Milk  Market  Observatory's 
Economic Board. The ratio butter/SMP price oscillated for ten years around an average of 1.4 
(min  0.8  and  max  1.7)  and  since  May  2016  has  grown  to  reach  current  levels  close  to  4/1. 
Against  this  unprecedented  disconnection  between  butter  and  SMP  prices,  offers  to  public 
intervention tend to occur in a situation where there is no market justification for safety net 
instruments to be mobilised. 

Public  intervention  at  fixed  price  will  resume  in  March  2018  until  September  2018,  as 
provided for in  the Common Market Organisation Regulation, within a quantitative limit of 
109 000 tonnes per year.  

High demand for butterfat being assessed by market experts as a structural phenomenon, SMP 
will  continue  to  be  de  facto  a  by-product  with  lower  valorisation  unless  new  outlets 
materialise. In this scenario, the risk of having to buy SMP into public intervention as from 
next March is real. Should this occur, while farm gate milk prices are at satisfactory levels, 
public intervention would clearly drift away from its objective of ensuring a fair standard of 
living for the agricultural community. 

A  solution  is  therefore  needed  to  prevent  buying-in  of  SMP  at  fixed  price  in  2018  without 
market justification to do so. To this end, the limit at which public intervention takes place at 
fixed price in 2018 should be set at zero. This would lead to opening a tendering procedure 
from 1st March 2018, when the public intervention period starts, where the Commission, with 
a  vote  at  the  Committee  for  the  Common  Organisation  of  the  Agricultural  Markets,  would 
decide on a case by case basis what volumes should be bought-in and at what buying-in price. 

In order to ensure that the measure provided for in this Regulation has an immediate impact 
on the market and to allow market operators to be informed in due time before the start of the 
next intervention campaign, 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 

EN 

Consistency with other Union policies 

2 

  EN 

2. 

• 

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 

Fundamental rights 

• 

N/A 

3. 

• 

N/A 

• 

N/A 

• 

N/A 

• 

N/A 

• 

N/A 

• 

N/A 

4. 

BUDGETARY IMPLICATIONS 

The financial impact depends on the quantities/prices of skimmed milk powder (SMP) offered 
and  the  quantities/prices  accepted,  between  March  and  September  2018,  which  depends  on 
the evolution of the SMP market. 

 5. 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

• 

N/A 

EN 

3 

  EN 

Explanatory documents (for directives) 

Detailed explanation of the specific provisions of the proposal 

• 

N/A 

• 

N/A 

EN 

4 

  EN 

2017/0310 (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 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) 

(2) 

Public intervention stocks of skimmed milk powder in the Union were reported to be 
at 357 359 tonnes by the end of July 2017. 22 710 tonnes were in addition offered for 
buying-in at fixed price until the intervention period closed on 30 September 2017. 

The  milk  and  milk  products  sector  is  experiencing  an  unprecedented  disconnection 
between fat and protein prices following particular high demand for butter. 

(3)  Milk deliveries in the Union are expected to increase in 2018, resulting in more butter 

and more skimmed milk powder production. 

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

1 

Raw  milk  prices  paid  to  farmers  are  likely  to  stay  in  2018  at  a  level  which  renders 
dairy farming remunerative because of the current strong demand for butter and cheese 
despite the relatively low prices commanded by dairy protein.  

These  market  elements  are  creating  an  exceptional  situation  for  the  year  2018  that 
needs to be specifically taken into account with regard to the operation of the public 
intervention mechanism for dairy products. 
Article 3 of Council Regulation (EU) No 1370/20131 sets a quantitative limitation for 
buying-in  skimmed  milk  powder  at  the  fixed  price  referred  to  in  Article  2  of  that 
Regulation.  Once  this  limit  is  reached,  buying-in  is  to  be  carried  out  by  way  of  a 
tendering procedure to determine the maximum buying-in price. 

In order to avoid skimmed milk powder being bought-in at fixed price in a situation 
where  this  would  not  be  in  keeping  with  the  objectives  of  the  safety  net,  all  public 
intervention  for  skimmed  milk  powder  should  be  operated  under  a  tendering 
procedure. To that end, the quantitative limitation for buying-in skimmed milk powder 
at fixed price should be set to zero for the year 2018. 

Regulation (EU) No 1370/2013 should therefore be amended accordingly.  

In order to ensure that the temporary measure provided for in this Regulation has an 
immediate impact on the market and to allow market operators to be informed in due 

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). 

EN 

5 

  EN 

                                                 
time  before  the  start  of  the  next  intervention  campaign,  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 following third subparagraph is added: 

'By way of derogation from the first subparagraph, in the year 2018, the quantitative 
limitation for buying-in skimmed milk powder at fixed price shall be 0 tonne.'. 

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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LEGISLATIVE FINANCIAL STATEMENT 

FINANCIAL STATEMENT 

1. 

BUDGET HEADING: 
See budgetary forecast below. 

FS/17/MvD/aj Ares (2017) 
5672905 
6.142.2017.1 
agri.ddg3.g.3(2017)5670846 
DATE: 13.10.2017 

APPROPRIATIONS: 

05 02 12 02 (Storage measures for skimmed milk powder) 

Budget 2017: EUR 19 million;  
Draft Budget 2018: EUR 12 million 

2. 

TITLE: 

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 quantitative limitation for buying-in skimmed milk powder 
LEGAL BASIS: 

Article 43(3) of the Treaty on the Functioning of the European Union 
AIMS: 
to avoid skimmed milk powder being bought-in at fixed price where this would not be necessary to 
achieve the objectives of the safety net due to high prices for other dairy products. Public intervention for 
skimmed milk powder should be operated under a tendering procedure. 
FINANCIAL IMPLICATIONS 

12 MONTH 
PERIOD 

(EUR million) 

FINANCIAL 
YEAR 
2018 
(EUR million) 

FINANCIAL 
YEAR 
2019 
(EUR million) 

3. 

4. 

5. 

5.0 

p.m. 

p.m. 

p.m. 

CHARGED TO THE EU BUDGET 

EXPENDITURE 
- 
(REFUNDS/INTERVENTIONS) 
- 
- 

NATIONAL AUTHORITIES 
OTHER 
5.2  METHOD OF CALCULATION: 

See observations 

6.0  CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE 

n.a. 

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? 

  No 

No 

See 
observation 

OBSERVATIONS: 

The  financial  impact  depends  on  the  quantities/prices  of  skimmed  milk  powder  (SMP)  offered  and  the 
quantities/prices  accepted,  between  March  and  September  2018,  which  depends  on  the  evolution  of  the  SMP 
market. 

EN 

7 

  EN