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: 2018-07-16
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

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   EUROPEAN COMMISSION  Brussels, 16.7.2018 COM(2018) 533 final 2018/0286 (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 

Council Regulation 1370/2013 sets a ceiling of 109 000 t under which skimmed milk powder 
has  to  be  bought  in  at  fixed  price  (169.8  €/100  kg)  during the  public  intervention period  (1 
March to 30 September). Once that ceiling is reached, public intervention continues but under 
a tendering procedure until the end of the intervention period. 

That ceiling was set at zero in 2018 to avoid public intervention for skimmed powder at fixed 
price  taking  place  with  no  market  justification  (e.g.  while  both  butter  prices  and  farm  gate 
milk  prices  were  at  reasonably  high  levels),  in  the  light  of  the  long  standing  disconnection 
between dairy fat and protein prices. 

Public  intervention  is  therefore  operated  in  2018  through  a  tendering  procedure.  The 
Commission, with a vote at the Committee for the Common Organisation of the Agricultural 
Markets,  decides  on  a  case  by  case  basis  what  volumes  should  be  bought  in  and  at  what 
buying-in price. 

In  2018, EU  market prices for skimmed  milk powder have remained on average some 19% 
below the public intervention  level, and butter prices 117% above  public intervention level. 
The  fat-protein  price  gap  is  wider  than  ever.  The  ratio  butter/SMP  price  in  2017-2018  has 
tripled  from  the  levels  between  2007  and  2016.  At  the  same  time  raw  milk  prices  paid  to 
farmers have been above 34 c/kg in average (higher than the last 5-year average) 

The  procedure  in  place  has  allowed  avoiding  unjustified  buying-in  of  109  000  tonnes  of 
skimmed milk powder (which would have piled up above existing stocks). 

As  market  conditions  have  not  substantially  changed  and  the  experience  gained  in  2018 
proves the correctness of the approach, it is appropriate repeating the initiative and setting to 
zero the ceiling in 2019. 

In  order  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. 

• 

Consistency with other Union policies 

N/A. 

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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 

N/A. 

3. 

• 

N/A. 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Ex-post evaluations/fitness checks of existing legislation 

• 

Stakeholder consultations 

N/A. 

• 

Collection and use of expertise 

N/A. 

• 

Impact assessment 

N/A. 

• 

Regulatory fitness and simplification 

N/A. 

• 

Fundamental rights 

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  2019,  which  depends  on 
the evolution of the SMP market. 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

5. 

• 

N/A. 

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• 

Explanatory documents (for directives) 

N/A. 

• 

Detailed explanation of the specific provisions of the proposal 

N/A. 

EN 

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2018/0286 (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) 

(3) 

(4) 

(5) 

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. 
Council  Regulation  (EU)  2018/1472  amended  Regulation  (EU)  No  1370/2013  by 
setting  to  zero  for  the  year  2018  the  quantitative  limitation  for  buying-in  skimmed 
milk  powder  at  fixed  price.  This  was  done  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. 

The milk and milk products sector is still experiencing a disconnection between dairy 
fat and  protein prices.  In 2018, Union  market prices for skimmed  milk  powder have 
remained below the public intervention level, while butter prices are more than double 
the public intervention level. 

Raw  milk  prices  paid  to  farmers  in  2018  are  at  a  level  that  renders  dairy  farming 
remunerative because  of the current strong demand for butter  and cheese  despite  the 
relatively  low  prices  for  dairy  protein.  The  operation  of  public  intervention  in  2018 
under  a  tendering  procedure  has  not  prevented  raw  milk  prices  to  maintain  these 
levels. 

The fundamentals for the milk and milk products market in terms of supply, demand 
and  price  evolution  are  not  expected  to  change  substantially  in  2019,  notably  as 
regards  the  disconnection  between  dairy  fat  and  protein  prices.  It  is  therefore 
appropriate setting to zero for the year 2019 the quantitative limitation for buying-in 
skimmed milk powder at fixed price. 

(6) 

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

1 

2 

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)  2018/147  of  29  January  2018  amending  Regulation  (EU)  No  1370/2013  as 
regards the quantitative limitation for buying-in skimmed milk powder (OJ L 26, 31.1.2018, p. 6). 

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(7) 

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 
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 fourth subparagraph is added: 

'By way of derogation from the first subparagraph, in the year 2019, the quantitative 
limitation for buying-in skimmed milk powder at fixed price shall be 0 tonnes.'. 

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. 

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

2. 

TITLE: 

FS/18/CM/pl Ares 
(2018)3208595 
6.142.2018.1 
agri.ddg3.g.3(2018)33
70117 
DATE: 01.06.2018 

APPROPRIATIONS: 

B2018 EUR 12 mio;  
DB2019 EUR 9 mio 

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 

FINANCIAL 
YEAR 
2018 

FINANCIAL 
YEAR 
2019 
(EUR million) 

FINANCIAL 
YEAR 
2020 
(EUR million) 

(EUR million) 

- 

p.m. 

p.m. 

3. 

4. 

5. 

5.0 

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  2019.  The  draft  budget  2019  foresees  no  new 
quantities of SMP into intervention. 

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