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The Commission's approach to the dairy sector is explained

20 May 2004

 Addressing the International Dairy Federation on September 25th
 2002, Commissioner Fischler explained the options in the dairy sector
 that are currently under review:

  • first option: to maintain the present status quo, that is to
     implement the decisions already taken in Agenda 2000 and to continue
     the quota regime after 2008 at the 2007/2008 quota and price levels;
  • second option: to repeat the Agenda 2000 approach, i.e. continuation
     of quota after 2008 with an increase of 3% as well as another
     price decrease of 15%;
  • third option: to introduce a two tier quota regime an 'A' quota
     for the internal market and a 'C' quota for export, at world market
     prices;
  • fourth option: to abolish the quotas after 2008. Prices are
     expected to drop by 25% in this case.

The Commissioner pointed out that as a result of Council decisions
 taken in Berlin in 1999 the Commission favours a gradual approach,
 since this tends to provide a smoother path for adjustment than
 outright quota abolition.
The Berlin decision to postpone dairy sector reform means that
 none of the benefits of reform can materialise until after 2008.
 However, the Commission remains open to accelerating the timetable
 for the implementation of dairy sector reform if this is the option
 favoured by member states.
Mr Fischler did, however, point out the implications of the direction
 of the mid-term review proposals for the dairy sector, namely that:
 'in the future, farmers will receive direct support not in order
 to produce a specific product, such as cereals or beef, but in order
 to provide the level of environmental benefits and quality products
 that the public wants.'
In discussions at the October Agricultural Council meeting Commissioner
 Fischler indicated that member states were divided into three groups
 on dairy sector reform, with some favouring lowering prices towards
 world market prices levels, despite the budgetary implications this
 would have. However he indicated that at the present time there
 was no indication where a consensus on the direction of change would
 take dairy-sector policy.

Editorial comment

 Developments in the EU dairy sector will have important implications
 for ACP dairy and beef producers as two-thirds of EU beef is produced
 from the EU dairy herd and 70% of all African dairy imports originate
 in the EU.