CAP HEALTH CHECK AND

CONSEQUENCES FOR THE DAIRY

MARKET
World Dairy Forum 2008, Porto 17.10.2008

Portuguese Position on the Health Check

(focus on Milk proposals)

Eduardo Diniz GPP-MADRP

CAP HEALTH CHECK AND CONSEQUENCES FOR THE DAIRY MARKET
Portuguese position

1. Portuguese position on the Health Check

2. The Health Check and the dairy market

3. Impact Assessment - estimates for
Portugal

4. (Different) soft landing

1. Portuguese position on the Health Check
Portuguese position on the Health Check
Objectives

Maintenance of a common agricultural policy after

2013 in response to common challenges
(sustainability, competitiveness, globalization)

Development and maintenance of economic

activity in all regions of the EU (including areas
with natural handicaps).
Portuguese position on the Health Check
Instruments

DIRECT PAYMENTS

MARKET MANAGEMENT

RURAL DEVELOPMENT
 Portuguese position on the Health Check
Instruments

Direct Payments:

Simplification (Cross; partially support): Recognition that there are

certain activities that need specific support . Non-simplification of
Crosscompliance.

Flat-rate without any EU redistributive effect, lack of Community

objectives post-2013

Specific support (Article 68 former Article 69): Complex, limited in

eligibility; insufficient financial resources; inadequate for a market crisis
(Article 44 OCMu).
Portuguese position on the Health Check
Portuguese position on the Health Check

Market Management

Single CMO: In the cereals sector, measures do not

respond to the regional supply deficit. Milk - negative
effects in Portugal, mitigation measures inadequate.

Rural Development

Modulation: lack of redistributive efect


2. The Health Check and the dairy market
The Health Check and the dairy market
Single CMO proposal – dairy aids and milk quotas

Milk quota increase of 1% per marketing year from 2009/10

to 2013/14

Additional to 2% increase for 2008/9 already decided by
Council

Report from the Commission by 30 June 2011

Article 204 and Annex IX sCMO / Articles 4(32) and (34)
and Annex I of the proposal

Reform of dairy aids to reflect new market situation

Aids for skimmed milk powder used as animal feed and
casein no longer mandatory but opened depending on
market situation with aids fixed by tendering

Disposal aid for cream and butter abolished as no longer
needed

From start of 2009/10 marketing year

Articles 99-101 sCMO / Articles 4(23)-(24) and 8(b) sCMO
 The Health check and the dairy market
Food Inflation rate (Abr08/Abr07) / Inflation rate / Inflation sector
(source: Eurostat 2008)

EU: 7,1%

EURO zone: 6,2% Bread & Cereals
Other
Sugar 18%

Portugal: 3,6% 7%
3%
rt.EU 10,7

Spain: 6,8% Vegetables rt.PT 9,2
11%

Bulgaria: 22,9%

United Kingdom: 7,2% Fruit
8%

France: 7,2% rt.EU 10,2
Meat

Germany: 6,4% 26%
Fats rt.EU 4,1
4% rt.PT 0,7

Milk & eggs Fish

16% 7%
rt.EU 14,9
rt.PT 14,1

3. Impact Assessment - estimates for Portugal

Impact assessment (http://ec.europa.eu/agriculture/healthcheck/index_en.htm)

Dairy production-related Annexes

Annex D: Market measures Milk Quotas (Supplementary analysis; How to Interpret additional internal EU
milk demand) Annex F: Microeconomic (FADN) analyzes

Dairy issues (Milk margins, Milk margins' evolution; Impact of the price reduction on milk margins,
Complement on mountain areas; Complements on national aids)
Impact Assessment - estimates for Portugal

Average output/farm 166 ton /farm

Average price 2008 378 euro/ton

Estimated price 2015 355 euro/ton

Total Losses
Dairy Farms Drop (euros)
Nº %
2008 2015 (1)

11 403 11 289 114 1% 6 719 788

11 403 11 175 228 2% 13 439 576
11 403 11 061 342 3% 20 159 364
11 403 10 947 456 4% 26 879 152
11 403 10 833 570 5% 33 598 940
11 403 10 719 684 6% 40 318 727
11 403 10 605 798 7% 47 038 515
11 403 10 491 912 8% 53 758 303
Impact Assessment - estimates for Portugal

ECONOMIC LOSS – analysis

Assumptions
- Drop in number of farms specialized and extrapolating to the
total national holdings in order to determine the reduction in
milk production from 2015;
- Current prices were used (2008) to calculate the economic
loss resulting from the reduction in milk production in 2015;
- Total holdings = the number of producers (quota holders);
Production of specialized holdings - 175 tonnes per farm
(source: Study DGAGRI);
- Production of the average dairy farms - 166 ton / exploitation
(Total quota used (1,882,755) / Total number of producers
(11,403)

4 (Different) soft landing
(Different) soft landing

End of quota system has an asymmetric impact in the

European Union.

Soft landing should enable restructuring and not support

abandonment .

Additional resources are needed (RD / art 68?).

Support should be provided without any regional

limitations.
(Different) soft landing
Future of Dairy sector in Portugal

Evolution 1992-2007, main structural indicators (Milk production)

140
+24%
120

100
-21%
1993 =100

80

60

40

20 -86%

0
1993 1995 1997 1999 2001 2003 2005 2007*
year

Milk Production (ton.) Dairy cows (1000 hds) Producers ('000)

source: INE and IFAP

Cows'yield (kg per Head-Year) 3987 (1993) 6240 (2007)

Producer yield (kg per holding) 1500 (1993) 14100 (2007)