Perspectives from the Real World Absence of European vision Benot - - PDF document

▶

Dec 17, 2022 470 likes •534 views

Perspectives from the Real World Absence of European vision Benot Rouyer Workshop For Dairy Economists and Policy Analysts 11 May 2011 Milk price determination in Europe : no classes of prices No European rules specific to milk price fixing

SLIDE 1

1

Perspectives from the Real World

Benoît Rouyer Workshop For Dairy Economists and Policy Analysts

11 May 2011 Absence of European vision

2 Cornell Workshop, Denver 29 April 2010

Milk price determination in Europe : no classes of prices

No European rules specific to milk price fixing In most European countries, there are no national rules specific to milk price fixing.

> milk price is determined by free negotiations

between farmers and processors, but the context of those negotiations differs widely. Milk price fixing is a national issue handled in accordance with European fair trading rules.

SLIDE 2

2

3 Workshop for Dairy Economists and Policy Analysts 10-11 May 2012

The volatility of the world market is impacting European milk prices at farm level.

1 2 3 4 00

World butter price

'000 € / tonne 12 1 2 3 4 00

World SMP price

'000 € / tonne 12 1 2 3 4 00

European SMP price

'000 € / tonne 12 2 3 4 5 00

European butter price

'000 € / tonne 12 200 300 400 500 00

European farm milk price

'€ / 1 000 litres 11

NB : European quotations in France ; European farm milk price in Germany. 4 Workshop for Dairy Economists and Policy Analysts 10-11 May 2012

This new exposure to volatility is linked to the CAP reform implemented in 2003

Objective of the reform: to guide the European dairy sector gradually towards more market orientation.  to confront the European dairy sector with world market signals in order to stimulate its reorganization and increase its competitiveness. In 2008, The ‘CAP Health check’ confirmed this free-market

rientation with the ratification of milk quota abolition for

2015.

SLIDE 3

3

5 Workshop for Dairy Economists and Policy Analysts 10-11 May 2012

The principle of CAP reform

CNIEL / Commission

1 2 3 4 5 6 7 90 92 94 96 98 00 02 04 06 08 10 5.3 6.0 4.4 4.8 4.3 4.1 3.8 3.7 2.9 3.1 2.8 2.2 2.6 3.0 2.8 1.7 1.1 0.6 0,1 0.4 billion € 0,5

 Less market regulation

European expenses for dairy sector regulation (storage + marketing aid + refunds)

/ Compensation by direct payment to farmers

5 billion € / year (6.5 billion USD)

6 Workshop for Dairy Economists and Policy Analysts 10-11 May 2012

Balance of the CAP reform - What is the current health of the European dairy sector?

20 40 60 80 100

99 01 03 05 07

Export refunds for SMP

€ / 100 kg

Aid decreased down to zero during CAP reform

09 11

2009 crisis (temporary reintegration for 9 months) CNIEL / Commission

No export refunds (except during the 2009 crisis) No more internal disposal subsidies

SLIDE 4

4

7 Workshop for Dairy Economists and Policy Analysts 10-11 May 2012

Balance of the CAP reform - What is the current health of the European dairy sector?

Gap between world and European prices is narrowing, especially for SMP.

*: French quotations CNIEL / ATLA, ZMB 1 2 3 4 99 01 03 05 07

1 000 € / tonne

EU Butter price World Butter price Average gap between European* and world prices before CAP reform (from January 1999 to June 2004) : 1 700 € / t after CAP reform (from July 2007 to January 2002) : 470 € / t 09 11 1 2 3 4 5 99 01 03 05 07

1 000 € / tonne

European SMP price World SMP price Average gap between European* and world prices before CAP reform (from January 1999 to June 2004) : 520 € / t after CAP reform (from July 2006 to August 2011) : 110 € / t 09 11

Butter SMP

8 Workshop for Dairy Economists and Policy Analysts 10-11 May 2012

The duality of thoughts in the minds of many European dairy operators A clear conviction that the long term outlook is rather positive,.. but also a relative anxiety of being defenceless if a new severe crisis should crop up.

SLIDE 5

5

9 Workshop for Dairy Economists and Policy Analysts 10-11 May 2012

Are we living in a reasonable world ? Can the world market be balanced if we all invest in the same field ?

10 Workshop for Dairy Economists and Policy Analysts 10-11 May 2012

Investments announced or finalized in 2011 and early 2012 concerning dried dairy products. The tip of the iceberg : total investments exceeding 3 billion USD 50 projects 28 countries

Tasmanian Dairy Products Co

44 companies

NZ Food Innovation (Waikato) Estancias del Lago Meierei Wasbek