Verbatim report of proceedings

Tuesday, 11 March 2008 - Strasbourg

16. Common organisation of agricultural markets and specific provisions for certain agricultural products as regards the national quotas for milk (debate)

  President. − The next item is the report by Elisabeth Jeggle, on behalf of the Committee on Agriculture and Rural Development, on the proposal for a Council regulation amending Regulation (EC) No 1234/2007 establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products (single CMO Regulation) as regards the national quotas for milk (COM(2007)0802 - C6-0015/2008 - 2007/0281(CNS)) (A6-0046/2008).

  Iztok Jarc, President-in-Office. − (SL) Let me first say that the Presidency welcomes the report by Mrs Jeggle on the proposal to increase the milk quota and is of the opinion that it is a constructive and balanced contribution to the debate that has been running for more than a few weeks now.

Based on the favourable market conditions, the European Commission has proposed in its report, or analysis, a 2% increase in national milk quotas starting with the next quota year, that is to say on 1 April 2008.

Milk quotas are not simply a matter of percentages; they are a wider issue linked to the review of the common agricultural policy. That is why the Council did not restrict itself to this issue but entered into a wider, simultaneous debate on the overall package of the common agricultural policy health check.

I must say that there were some very similar thoughts or doubts about this proposal in the Council and Parliament. For example, there were calls for more anticipation and stability in the milk sector. There was concern about areas with less favourable farming potential where there are few alternatives to traditional dairy production. On the other hand, there were resolute calls to enable European farmers to take advantage of the opportunities offered by the developing international and European markets.

Despite the complexity of this problem, we are convinced that we can find balanced answers and solutions to it within the framework of the common agricultural policy health check. I would like to add here that the Council supports Parliament in the suggestion that the Commission prepare a general, long-term strategy, that is to say a proposal for a strategy, for the European dairy sector. We think that the essential part of that strategy should be a so-called soft transition to the elimination of milk quotas, which would secure an unhindered transition to a more market-orientated dairy policy and predictability in this sector.

To this end the Council intends to call on the Commission to study all the appropriate means of achieving this. However, we think that the Commission's proposal for a 2% increase in the quota for the next quota year should be treated as part of a package and that the other parts should be appropriately debated within the common agricultural policy health check.

I would also like to add that the proposal will be on the agenda for the session of the Agriculture and Fisheries Council that is to take place next week. I hope it will be adopted. So, if the conditions are satisfied, implementation will begin in the present quota year, that is to say 2008.

Finally, allow me to thank everyone who contributed to the debate on this report, above all the rapporteur. In our opinion it is a balanced and well-founded observation. Thank you for your efforts.

  Mariann Fischer Boel, Member of the Commission. − Mr President, I think it is a very good signal from the Presidency that the Minister for Agriculture is present here today to participate in this very important discussion.

I shall start my speech in the traditional way, by thanking the Committee on Agriculture and Rural Development and especially the rapporteur for the very constructive report on the proposal to increase the milk quota system by 2%, as was stated by the Minister, for the coming milk year starting on 1 April 2008.

Many people have pushed the Commission to alleviate the very tight dairy situation. In the Council, a large majority of Member States invited the Commission to put a proposal on the table on increasing quotas. A resolution here in the European Parliament, adopted in October 2007, on rising food prices also called on the Commission, as a matter of urgency, to propose a temporary increase in milk quotas. In December 2007 the Commission presented a market outlook report that showed that there clearly is, and will be in the future, a growing demand for dairy products.

Your report also confirms that we should increase the possibilities for producing more milk. I think everybody would agree that the Commission’s proposal is fairly prudent and clear, with a predictable and equal outcome for all the Member States. May I respectfully suggest that your amendments seem not to pay full attention to the need for predictability and equal treatment for farmers?

The amendment to make the increase of 2% voluntary for Member States, if applied, would be likely to create some difficulties. Firstly, I think we would all agree that we are looking for more market orientation and higher productivity. Therefore, I personally feel that the producer should be given the choice of whether or not to produce more milk. I think we would also agree that dairy farmers need predictability – certainty about their production possibilities within the quota system – and I do not think that a voluntary system would contribute to this.

As a solution, Member States have the opportunity to decide not to distribute the quota but to keep it in the national reserve. This is a possibility, although I would push the Member States and I would be happy to see the quota distributed, because I think it is the most proper way.

The amendment to use balancing-out of the quota at the end of the quota year is not a new idea. In fact, it is something that the Commission has been looking closely into, since such a theory could facilitate the use in some Member States of the unused quota in other Member States. But I think we would also agree that theory is one thing and practice is another.

Firstly, I think it clearly introduces uncertainty for milk producers. They would then have to make their best guess of how the situation would look at the end of the production year and, on that basis, try to make a choice for their production, and only the following year would they know whether that production was levy free or not. I think, with all respect, this is not to the advantage of the decision taken on the dairy farm. It is obvious that milk production implies heavy investment, and we owe it to our farmers to have a predictable system until the quotas disappear in 2015.

Secondly, who would benefit from this? I do not have to point out that it would largely benefit only a small group of Member States. This already makes it politically difficult. The most important thing is that it will benefit those producers who have already exceeded their quotas – those who have produced too much – and not those who have tried to keep within the limits of the quota system. So there is no certainty that this would lead to more milk being available on the market.

Thirdly, in my view, this also goes against the idea of simplifying the common agricultural policy. I fear that implementing rules in this area would be extremely complex, and I am not in favour of making our system more complicated in a situation where there are only seven years left of the lifetime of this quota system.

All in all, I note with pleasure that we all agree on the necessity for increasing the possibilities for the dairy sector in Europe to increase its production. It is an extremely important political signal to me and to all the Member States that the Agriculture Committee unanimously chose this line after the very divided opinions at the beginning of this discussion. I therefore send my biggest congratulations to the rapporteur for that achievement. I hope I will have the same rate of success in the Council.

  Elisabeth Jeggle, rapporteur. − (DE) Mr President, Commissioner, President-in-Office of the Council, ladies and gentlemen, as already stated, the Committee on Agriculture and Rural Development has unanimously rejected the Commission’s proposal to increase the quotas for the coming milk year by 2%. This would amount to 2.8 million tonnes. We consider this proposal to be too rigid, too inflexible, and it is the wrong signal in the current situation, particularly for the markets. Based on the rulings of 2003, there will be a 0.5% increase in quotas for 11 Member States anyway on 1 April this year – the equivalent of 700 000 tonnes more milk in the European Union.

The intensive debates with my colleagues in the Committee on Agriculture have shown that there will be no panacea, nor any comfortable way to conduct further debates. There are widely differing opinions and all positions, from the general and fundamental rejection of any increase in quotas up to and including a 5% increase, were represented. We nevertheless managed to find a compromise that took account of the positions of all the groups, and this was unanimously accepted with no dissenting votes or abstentions. My heartfelt thanks go to all my fellow Members for their constructive cooperation.

The agreed compromise has two focal points. Commissioner, you have said as much. I have a different opinion on this.

Firstly, the establishment of a European balancing mechanism, by which under- or over-shooting of the existing national quotas can be compensated at EU level. This would not be very bureaucratic and would result in producers who exceed their quotas being penalised only after balancing.

Secondly, as from 1 April, the Member States can decide to raise national quotas voluntarily for the 2008/2009 quota year. We want flexibility, not rigidity! This compromise means that the quotas that already exist will be used more efficiently. For Member States with greater potential, there is also the opportunity to use this European quota framework along the lines of a common European internal market system.

Commissioner, you always stress that the existing milk quota will expire in this system in 2015. A linear increase in quotas alone will not, however, create the soft landing you promise. Just think back, if you will, to the old milk lakes! The Committee on Agriculture has therefore unequivocally been arguing, as it has done already in the mini milk package, in favour of setting up a milk fund in order to achieve savings in costs resulting from the reforms explicitly for the milk sector. In our view such forward-looking promotion and preservation of the entire sector can be made possible only in this way. In particular this instrument should be used for dairy farmers in disadvantaged areas and in areas completely given over to grazing land and pasture. I would therefore ask you, Commissioner, to include this request by the European Parliament in tangible terms in your legislative health check proposal.

In our view the application of Article 69 is insufficient because it is not clearly defined in terms of practical measures, particularly for the sector already mentioned. It is also pure cynicism when a high-ranking Commission official announces to a gathering of farmers that they should not be complaining about producer prices already effectively falling again, since they had already been making do with 27 cents per litre of milk. This is contempt for the legitimate interests of an entire profession, which I, as a Member of a Parliament, having taken up the cause of democracy at the highest level, do not accept!

  Czesław Adam Siekierski, on behalf of the PPE-DE Group. – (PL) Mr President, I am sure that an increase in milk quotas in the 2008/2009 quota year will not threaten the stability of the EU milk market, and there will not be a significant fall in milk prices. We would have expected a greater increase, but on hearing the arguments put forward by Mrs Jeggle and other MEPs we supported the package of compromise amendments that talks of a voluntary increase of just 2%.

It transpires from information in the press that the Commissioner supports proposals for an annual increase in quotas of only 1% from 2010 as part of what is called the soft landing. This is rather a conservative approach, although the Commissioner is reportedly a liberal – but let us get down to business. On the one hand low quotas limit the development of the EU milk industry by lowering its competitiveness and export potential. On the other hand this is a guarantee of stable income for our farmers.

We shall continue to discuss the choice of the best solution in the future.

(The President cut off the speaker)

  Rosa Miguélez Ramos, on behalf of the PSE Group. – (ES) Mr President, the truth is that the extremely low prices that were paid to European milk producers for years caused major damage to the sector. They caused large-scale abandonment of the sector, especially in some regions such as my own, Galicia, and another of their consequences was that there were huge reductions in the strategic reserves of milk, which is a basic necessity.

I would like to say that, since 2007, the market has been developing positively, and in fact this is giving producers some respite, and even enabling them to invest in their farms, which was unthinkable until now. There are two pieces of good news in this respect, according to the Commission’s own report: positive prospects for the future mean that additional amounts of milk are required from the market, therefore a 2% increase is proposed for this year. I have been in agreement with this proposal from the start, Commissioner.

I have been in agreement with this proposal and I have tried to work alongside the rapporteur, Mrs Jeggle, precisely because it is clear that there was some reticence and that there were some members of the Committee on Agriculture and Rural Development who did not think that this proposal from the Commission should be supported.

However, from my perspective and as I understand it, Parliament should not, as you said, be curbing those producers who decided to respond positively to the demands of the market. It was therefore I who proposed, in agreement with Mrs Jeggle, to make this measure voluntary.

As Mrs Jeggle has already said, the report was adopted unanimously in the Committee on Agriculture and Rural Development. Although it is true, as the rapporteur said, that there is underusage of the quota at EU level, this underusage is by no means equally distributed between all the Member States, nor is the production deficit as against theoretical consumption.

Just consider that in my country, Spain, the production allocated to us is 6.1 million tonnes and our theoretical consumption is 9 million tonnes. Spain therefore has, it has to be said, almost the largest deficit per inhabitant per year in the whole of the European Union.

Therefore, in Mr Goepel’s report, we have asked for this adjustment of the quota to be done in future, not by means of a linear increase, as in the proposal that you are putting forward now, but rather based on the gap that exists between the current structure and the structure that the sector should have, as you say, in order to be competitive and face up to the market alone. In this respect, Commissioner, I would like to ask you whether you are considering the possibility, in relation to the adjustment mechanisms or soft landing, of designing individual models for each Member State.

I would like to make it very clear that I think that milk production should be preserved right across Europe. With regard to quotas, before saying that we are now going to abandon them and that they are going to disappear, we need to think about their socio-economic role of protecting many fragile economies. In many areas milk production is, as you know, the only agricultural option, therefore this system has helped...

(The President cut off the speaker)

  Niels Busk, on behalf of the ALDE Group. – (DA) Mr President, Commissioner, President-in-Office, the rapporteur, Mrs Jeggle, has again produced an excellent piece of work, for which I should like to thank her. European milk producers are currently facing great challenges on account of the soaring demand for dairy products from the Far East, in particular. This is a very positive problem. At the same time, the production economy is being undermined by soaring feed prices, as the EU is preventing the import of feed, which our competitor countries need. In order to survive we need to give permission for quota increases now. Otherwise, if we wait until 2015, when quotas are hopefully to be abolished, we shall miss a unique opportunity for the European dairy industry.

My group wants to see the liberalisation of milk production in Europe by means of market economy and free competition, and the quota system is at odds with this. Increasing production by at least 2% and reassessing at a later stage whether further quota increases are needed will support and maintain strong, forward-looking milk production in Europe and create a smooth transition to the abolition of the quota system, which was introduced in 1983 – incidentally as a transitional arrangement – owing to the development of whole milk powder and butter mountains. Fortunately, these no longer exist – now the market wants more milk products. Let us give European milk producers the opportunity to provide these.

  Alyn Smith, on behalf of the Verts/ALE Group. – Mr President, I shall be no exception in congratulating our rapporteur on a solid piece of work, which I think is best viewed as part of a wider picture of how we ensure long-term stability for Europe’s farmers and growers.

I have two points to make. We accept and we welcome the proposals from the Commission for quotas to be done away with by 2015. We would, however, like to see a system of production controls, and we disagree with the point in the report that there should be a voluntary opt-in mechanism for the Member States. We in the UK in particular have seen voluntary modulation which, of course, is not voluntary at all for the farmers who are stuck with it, and we disagree with that principle. We do not believe that asymmetric deregulation makes sense.

In the longer term as well, I would stress to our Commission colleagues that one of the major points, as we see a much more liberal and much freer market in milk products, will be the impact of competition law on how farmers, in particular, have to deal with long-term private contracts and the abuse of certain producers and purchasers, in particular, within the milk market. But, on the whole, this is a solid piece of work and we are happy to broadly support it.

  Dimitar Stoyanov (NI). – (BG) The condition of dairy production in Bulgaria is an example that there is something wrong in the economic system of the European Union.

The increase of the quotas is of little relevance since 30 % of the cows in Bulgaria have died of starvation for the first year of the EU membership alone. This is due to the huge inflation rates brought about by the EU, as well as the new regulations, quotas, and higher prices of feeds and fuels.

How much more time will have to pass? Perhaps it will be some two years before the country that is the homeland of the yoghurt, the homeland of Lactobacillus bulgaricum, remains without a single living cow thanks to the EU.

  James Nicholson (PPE-DE). – Mr President, first of all I welcome the recommendation that the rapporteur has put before us here today of 2% for the 12 months as a voluntary measure. I think it is a measured position to take.

I am opposed to opening the floodgates on production as this, I believe, would solve nothing. Let us see how the market develops over the next 12 months. Then we can come back next year, re-visit the situation and take a much broader view. Everyone talks about a ‘soft landing’ for quotas but no one can tell me what that soft landing will be. It is a word that we use – the President-in-Office has used it and the Commissioner has used it – but what are we really talking about here when we hit 2013? I know that it is a long way away, but there are many dairy farmers out there at the moment who are really wondering what the situation is going to be as we lead into that time?

So, while the returns for the dairy sector have changed dramatically during 2007, we cannot guarantee that this will continue forever. Let us be very honest about it. It was not what the Commission did. It was not what we, the politicians, did. It was not what any national government did or even the dairy sector did. It was market forces in the world that drove market price up and that is exactly what happened. Cereal prices have been driving the price up. But we have also got to understand that, coming into the next 12 months, the cost of cereals, the cost of fertiliser, the high cost of energy, the forage cost this summer, is going to mean that lots of the extra money that has gone to the dairy sector will in actual fact be absorbed in these extra costs.

So let us not get carried away in believing that everything is so rosy and everything is wonderful in the dairy sector – because it is not. The extra 2% will produce a substantial amount. But I do agree with the Commissioner – let us not make the situation more complicated. Let us make it easier for the producer. The milk and dairy farming sector, regardless of where you are in Europe, is the backbone of the small family farm structure, and we must support it.

  Csaba Sándor Tabajdi (PSE). – (HU) Mr President, Commissioner Fischer Boel, the 2% milk quota increase proposed in the report affects numerous Member States. Hungary is not affected by this, since it uses only 70% of its milk quota allocation, but we are nevertheless in solidarity with Member States such as Poland and others which need to increase their milk quota. In addition to the quota increase, we must prepare for the abolition of the milk quota regime altogether in 2015, as the Commissioner proposes, and so we need to devise support mechanisms that will provide real help in promoting quality milk production. A particular problem in some countries is the lag in technical and technological development. It would therefore be good if Community resources could be used to foster technological development in countries such as Hungary or other new Member States that have not been able to use their entire quota allocation. When increasing the quota, it is also important to develop innovation in the agricultural sector. The increase in fodder crop prices is a problem, and there is a particular problem that neither Commissioner Fischer Boel nor anyone else can do anything about, namely that in Hungary the dairy processing industry is unfortunately not owned by the milk producers, and this puts them at an enormous competitive disadvantage. Thank you for your attention.

  Margrete Auken (Verts/ALE). – (DA) Mr President, as the Commissioner knows, the general debate in Denmark is very unfavourable towards agricultural subsidies. We are very much aware that, if it is attractive to produce milk in Europe, this can be attributed in great part to artificially high prices and the restriction of competition from third countries. The conditions resulted in overproduction, which we have endeavoured to ration via quotas. I shall not go into all of the misfortune this has entailed, but merely point out that, if the Commission wants to increase quotas to take into account the growing demand, this is of course insufficient. Quotas must be abolished completely, and the distortions in the market must be eliminated. Therefore, there must be a thorough reform of the common agricultural policy, with payment by surface area being phased out much more quickly than is the case at present. The market must be liberalised properly, and this should be the main objective of the reform. In addition, we can examine the possibilities for continuing support to selected small areas where there are good arguments for milk production despite the economic conditions. Liberalisation must form part of the EU’s agricultural policy: a policy that incorporates environmental sustainability into the general market conditions and ensures free access to EU markets under fair conditions for developing countries. There is still a long way to go before we can take pride in the EU’s agricultural policy.

  Albert Deß (PPE-DE). – (DE) Mr President, Commissioner, President-in-Office, I should also like to thank Elisabeth Jeggle for having worked so ably on the report. The present quota system has been agreed up to 2015. It will therefore remain in force for a further seven years and a few days, to be exact. I think it is wrong, Commissioner, to raise the milk quota now by 2%.

I would have understood completely if the quota had been raised by 2% for the new Member States because consumption of milk products there is way below the EU average. Commissioner, however much I may respect you, I think the Commission’s proposals are wrong. Over the last few months our dairy farmers have been obtaining a fair milk price for the first time in many years. Our dairy farmers, who milk their cows morning and evening, 365 days a year – 366 days this year – deserve to earn a better income than has been the case in recent years.

Increasing the quota now therefore means that milk prices will be put under enormous pressure and they are already under pressure without any increase. We talk here of a soft landing, which for me means pulling the wool over the milk producers’ eyes. There will be no soft landing; there will be a rough landing when it is realised what the Commission has in mind as regards quotas. I believe the Hoelgaards and Rasmussens in the Commission, who would like to see a sudden fall in milk prices, must be stopped. You should not let them get away with this.

Even without any increase we have problems and we must try to counteract this here. The Bavarian CSU Members will be voting against the report tomorrow because they are against the increase. This is not directed against Elisabeth Jeggle, but against the increase in quotas.

  Bogdan Golik (PSE). – (PL) Mr President, I would like to begin by thanking my fellow Member Mrs Jeggle for the enormous amount of work she has spent on drawing up this report. What we are discussing today I presented three years ago when I first started my work in the European Parliament. For three years we have been saying how necessary it is to increase milk quotas in the new Member States and in the European Union, to even out the unfair and disproportionate split in these quotas between the individual countries, to increase production, and primarily export, and above all to cease penalising those farmers who want to increase production and who want to produce good European milk.

The essential arguments confirming my stance of three years ago are also to be found in the Report from the Commission to the Council ‘Market Outlook for the Dairy Sector’, which announces the continuation of positive trends in the world milk market. Milk quotas allocated to individual countries are not being fully taken up. On the other hand a 2% increase in quotas does not necessarily imply the same increase in milk production in all regions. More and more farms in the EU are moving away from milk production, considering it to be too labour-intensive. Consequently in all those countries that wish to produce it we should increase the quota by 5% rather than 2%, particularly in view of the fact that there will be an increase in the number of customers worldwide and, especially in Asia, an increase in demand for excellent European dairy products.

  Astrid Lulling (PPE-DE). – (DE) Mr President, opinions are divided on milk quotas. We have also seen this within our Committee on Agriculture and Rural Development, which has nevertheless accepted a unanimously agreed compromise. If the European Parliament therefore wants to send out a signal to the Commission and the Council of Ministers, it should also be aware, however, that the farmers and their representatives are still divided.

Some are fully able to accept an increase in quotas of 2% or more and therefore a soft landing prior to the total abolition of quotas. They want growth opportunities through better use of their production potential, because the market opportunities in the EU and on the world market as a result of constantly rising demand are very attractive. Others fear a slump in production prices, which have only recently become fairer, if greater quantities of milk are produced.

Opinions are also divided on the European balancing out proposed by the Committee on Agriculture. Does this not now mean abandoning the national milk quota system when there is an undersupply of 3 million tonnes across Europe? Would the target not be reached too by reducing the superlevy and increasing the dairy quotas? Which dairy farmer has the courage to play poker in the countries where – as in Luxembourg – the superlevy for 2006-2007 will once again be falling due by overshooting the quotas? Because a voluntary 2% increase in milk quotas for the 2008-2009 milk year is part of the compromise, I am able to support it.

I am particularly pleased with our report’s request to set up a milk fund restructuring programme. I think it is extremely important that an analysis of the economic, social and ecological effects of increasing the milk quotas and a report on consumer behaviour will shortly be demanded that expressly calls for consideration of the particular factors of milk production in disadvantaged regions such as Luxembourg, with difficult production conditions.

The money planned for the milk sector must continue. It must also be clarified that producer prices, which are fairer in the long run, are only marginally to blame for higher prices for food. Distributors and the dominant food chains are continually counting their blessings here.

  Katerina Batzeli (PSE). – (EL) Mr President, I would like to begin by thanking and congratulating Mrs Jeggle and all the coordinators who have really tried to achieve a balance in the particularly sensitive area of milk quotas - a policy that European stock breeders and farmers expect to bring far-reaching, radical changes.

Commissioner, it is particularly encouraging that, when faced with a change in dairy product supply and demand, the Commission responded by amending one of the key regulations and increased the national quotas by 2% for the period 2007-2008. I should like to point out that it is acceptable for the Commission to show this kind of flexibility in matters of developing the market for agricultural produce, particularly foods, especially during a period when the stock-breeding sector is facing viability issues owing to the crisis on the international market.

However, it is also a matter of principle that such a crisis cannot be resolved by the same measures and policies for all types and sizes of stock-breeding operation. For this reason, I stress that within the scope of their discussions the Commission and the Council must re-examine the question of fat content, in order to prevent distortion of competition at the expense of countries for which a low fat content has been stipulated.

  Maria Petre (PPE-DE). – (RO) First, I would like to congratulate the rapporteur for her work and efforts made in finding a compromise in this extremely delicate matter.

In my capacity as a European deputy from a new Member State I consider beneficial the increase of 2%, even though we wanted a significantly higher percentage, especially for the Member States with both low milk quotas and unused production potential. The increase in national milk quotas is not a threat to the stability of the milk market.

I would like to point out the fact that an increase of the quotas by 2% represents -in fact- an actual increase in milk production at community level by only 0.8%. I also believe that we need to maintain the current quota system to stimulate the consolidation of the existing farms and to stimulate new ones. The term used in relation to the quotas from the perspective of common agricultural policy reform is “smooth landing”, meaning a gradual elimination of quotas.

The new Member States, mainly Romania and Bulgaria, which joined the Union on 1 January 2007 and which, if I am to use the same language, “took off” abruptly, will be facing difficulties in adapting the “takeoff” procedures to those of a smooth “landing”. If this proposal had not been accepted, the quota assigned to Romania would have run out, like in 2007, in mid-year, which in fact does not stimulate but rather completely discourages the development projects of our farmers. I hope that the vote in plenary session for this report be as firm as the vote in the Committee on Agriculture.

  Gábor Harangozó (PSE). – (HU) Thank you, Mr President. Commissioner, ladies and gentlemen, I would like to take this opportunity to congratulate Mrs Jeggle on her excellent report and all the hard work that went into it. There is no doubt that the European Union needs to respond appropriately to the growing global demand that is prompting a significant increase in the milk quota. The proposed 2% quota increase, scheduled to take effect in every Member State at the beginning of April 2008, will perhaps help this sector within the European Union to take advantage of the opportunity offered by global demand. Nevertheless, we need to resolve the issue of milk quotas without creating another problem in the process.

I would like to emphasise that as well as meeting genuine market demand and expanding the range of products on offer, we must help to improve the already difficult situation of producers. This is why we must ensure that appropriate weight is given to the social and environmental impact of the quota increase, and its impact on production, especially as regards supporting producers in less favoured regions. Ensuring that the price is appropriate for producers and consumers alike is indispensible for internal market mechanisms. In view of the fact that the quota system will be abolished after 2015, we must start to think now about how to help producers make their businesses efficient and profitable. Thank you for your attention.

  Béla Glattfelder (PPE-DE). – (HU) Thank you. Increasing the milk quotas in the current market climate is rash and risky for two reasons. On the one hand, the market outlook is nowhere near as favourable as the European Commission supposes. Recent developments demonstrate clearly the risks involved in raising the quota. Consumers in Europe and beyond have responded sensitively to the increase in prices of dairy products. In a number of countries consumption has decreased by 10-30%, and imports of milk powder from China have decreased. As a result, the purchase price of milk in Hungary, for example, has fallen by 10-20% in the past few weeks. The prime reason for all this may be that, while prices of other foods have risen, meat prices have not so far followed suit, with the result that consumers are meeting their protein requirements by consuming meat rather than increasingly expensive dairy products.

At the same time, in many Member States a significant proportion of the milk quota is unutilised. Increasing the quota would impede producers in these Member States from using the opportunities available to them; indeed, for these countries a quota increase could actually result in a drop in production because producers in Member States that are using their quota will buy up the livestock they need to increase milk production from these countries.

For the time being, therefore, there is no need to increase the quota. Let us wait and see what happens. If the price rise and increase in demand persist in the long term, then we should revisit this issue.

  Miroslav Mikolášik (PPE-DE). – (SK) The figures for the 2006/07 quota year show an under-usage of 1.9 million tonnes of milk at EU level, with 18 out of 27 Member States producing below their national quotas.

The European Commission is expecting for the 2007/08 quota year an under-usage of 3 million tonnes of milk. The issue of an additional 2% quota increase is, on the other hand, debatable. I agree with the view that all the options should be considered based on their applicability, with emphasis on their economic, social, regional and budget impact.

In my opinion, the new Member States should receive bigger subsidies, set at 2% as proposed, in order not to be discriminated against because of their past, as we are all aware of the higher demand as well as the higher prices.

  Zdzisław Zbigniew Podkański (UEN). – (PL) Mr President, my fellow Member Mrs Jeggle has put forward a good proposal for increasing milk quotas. The case for increasing them and for creating a system of balancing out at EU level is also supported both by the situation on the milk market and by dairy farmers.

In view of this situation, questions must be asked. Why has the European Commission been so slow to react to the need to increase milk quotas? Is it planning to secure the interests and existence of EU producers by setting a minimum price for milk at a level that guarantees a profit for all EU producers and puts an end to purchases below the cost of production? Does the Commission envisage an evening out of the imbalance in milk production between the old and the new Member States?

  Friedrich-Wilhelm Graefe zu Baringdorf (Verts/ALE). – (DE) Mr President, Commissioner, two weeks ago, four and a half thousand dairy farmers descended on Brussels from all corners of Europe. They joined forces to form a European Milk Board and are now demanding fair prices.

This has already had a considerable impact in Germany. We have producer prices that were around 40% and are now coming under some pressure again. Dairy farmers are therefore demanding a volume-based market policy. If this development were to grow, if it were to influence agricultural policy, can you imagine that a Commission in the year 2015 would be able politically to resist the demands of this movement to increase or again apply the dairy quota system in a flexible manner?

  Jim Allister (NI). – Mr President, I share the concern of many in this House about a definitive increase in milk quotas. I think the point we have arrived at requires the asking of fundamental questions, which includes the fact that, if we have a prevailing underproduction and sub-quota situation in Europe, then what really is the underlying justification for increasing quotas? This year, we expect three million tonnes’ under-usage, so what is the great rush in this regard?

Secondly, in terms of the much talked-of soft landing, we need to have particular regard for those regions which have built their structure and their strategy supplying other regions which are currently limited in their production – regions such as my own constituency, which supplies across the border to the Republic of Ireland. In terms of a soft landing, we need to find a long-term strategy and alternative outlets for regions such as this.

  Mairead McGuinness (PPE-DE). – Mr President, I am wondering what producers who might be listening to this debate would think – it is so complex. I congratulate Ms Jeggle for miraculous work in getting consensus. However, those of you who have flown into the storms this week know that a soft landing depends on which way the wind is blowing and none of us know which way the wind will be blowing in a few years’ time.

I would think that giving a 2% increase in quota – and the voluntary bit in my view does not rest with the Member States, it is the producers who decide whether to take it or not – will allow us to test the market, and we need to do that. 2% is not a massive increase for individual producers.

As for the concerns – and perhaps the Commissioner has thought too deeply about the balancing mechanism – you are heavily taxing producers who can produce while at the same time Member States do not want to produce. We have had this argument already from other colleagues, so we need to do something about it.

Lastly, the WTO deal might make ...

(The President cut off the speaker)

  Neil Parish (PPE-DE). – Mr President, I would like to thank Ms Jeggle very much for getting a difficult report together. Can I just quickly say that ‘faint heart never won fair maiden’, and I think we need to be much bolder here. Milk quotas are like a pressure cooker: you cannot keep the pressure on right to the end and then take it off, because it just bursts. I am quite clear what a soft landing means, and that is to increase quotas significantly before we get to 2015, so I very much welcome this 2%.

I would say to the Commission and to the Council that we should be much bolder when we get to 2010. Let us not look just to 1%, let us look to 2% and make sure that we do have a genuine soft landing for milk quotas. Young farmers and new entrants have all been restricted over the years. Now is our opportunity to give them this production. At last milk trade is increasing in the world...

(The President cut off the speaker)

  Agnes Schierhuber (PPE-DE). – (DE) Mr President, milk is a highly sensitive product and I should like to thank Mrs Jeggle most sincerely for an effective compromise. I particularly welcome the voluntary increase in milk quotas in the Member States. I should like to point out the following, however. Anyone who continually cites the price of food as justification for an increase in quotas or overproduction completely overlooks the fact that dairy farmers do not receive even 30% of the sale price in the shops. I believe we ought to be discussing this.

It is also essential that milk production can continue in mountainous regions and disadvantaged areas because it is often the only form of production taking place there. We need a special programme here.

  Esther de Lange (PPE-DE). – (NL) I shall skip the words of thanks and move on to saying that I welcome the proposal to increase the quota by 2%. Personally, I would have preferred 3%, as the European Commission itself admits that 2% amounts to a mere 1% in practice, as not all countries make full use of their quotas, but I shall in any case support Mrs Jeggle’s compromise of 2%.

To the European Commission I would say that this is not before time, as we were overtaken on the world market by New Zealand back in 2006. Demand increased, so there was scope for exploiting opportunities, but we could not exploit them as we were constrained by the quota system. This system had a role to play when there was overproduction but, now that demand has increased, we should develop another system that enables us to exploit those market opportunities. In this context, I also think it a shame that the Health Check is evidently now looking at four 1% increases. In my opinion, a real soft landing requires more of an increase than 1%. Let us have the courage to do that.

  Iztok Jarc, President-in-Office. − (SL) I would first like to thank all those present at the debate. As always in Parliament, it was very complex and rich and highlighted all the problems and differences that exist among the Member States.

I would like to stress that the Presidency, and of course the European Parliament, undoubtedly gave this proposal enough time to be looked at from all sides. If the conditions for adoption of this proposal are satisfied, taking into account the opinion of the European Parliament, this 2% increase will be used as from the next quota year, that is to say from 1 April 2008.

However, I would like to emphasise that this will not end the debate on the future of the dairy sector in the European Union. Without doubt, it will continue in great depth within the framework of the so-called common agricultural policy health check.

I can guarantee here that the Presidency is firm in its decision to lead this debate and to reach our common goal, that is to say – and this has my assurance – a balanced long-term strategy for the European dairy sector.

Thank you again for taking part in this debate and my special thanks to the rapporteur.

  Mariann Fischer Boel, Member of the Commission. − Mr President, I think that, after the discussion here today, we can all agree that dairy production is still a very important part of our common agricultural policy. It seems to me that today you could pick and choose between different opinions, covering the whole range from zero up to more than we have suggested in our proposal. I think it has also shown the diversity that can be seen in different Member States, and that is perhaps a reason, in response to Mr Parish’s remarks, for not being bold enough. But at the end of the day we need to find a compromise between the various opinions.

I would just like to make a few comments on some of the issues that have been raised. On this increase in quota, it is voluntary for Member States either to distribute it to the producers or to keep it in the national reserve. My clear preference will be to distribute it. Member States can give special preference to young farmers and those who are suffering as a result of the prices that they have to pay for the quotas.

I think that, if we want to introduce an increase as from 1 April, we need to do so with a fixed percentage in all Member States. If we now start to discuss special figures or increased percentages for different Member States, there will be a battle that will go on for months. So let us agree that what we are discussing now is a 2% across-the-board increase. I actually do not think that we are so fundamentally divided in our opinions on where to go. I think we can define our goal, but there may be some differences of opinion between the Commission and Parliament on how to get there.

I think we can all agree that we should not put the sector at risk. This is exactly why I have proposed this soft landing. A ‘soft landing’ actually means that we increase the quotas over the years and maintain a situation where, at the end of the quota system, in 2015, we do not see a very steep drop in prices overnight, which would be the result if we did nothing. I therefore think we have chosen a proper and acceptable approach. I do not underestimate that there may be regions in Europe – mountainous regions, vulnerable regions – where a total abolition of the quota system could put the continuation of milk production at risk. Therefore, we will be prepared to look, during the health check, at solutions to help those regions. I think the most proper tool is Article 69, a possibility for Member States to top-slice the direct payment to the farmers and use it for specific areas.

I do not consider the idea of setting up a milk fund for restructuring to be a solution. Where do we get the money from? How much money do we get? How do we distribute the money between the different Member States? I think there are so many unanswered questions concerning this fund, and we have limited money. We would have to take it from our own budget, and then other producers within the agricultural sector would have to pay for this restructuring fund. So I do not think it would work.

In my opinion, the main reason for increasing milk production is the fact that we have emerging markets in Asia. Why should we not take our share of those growing markets? We know how difficult it is when others already have a foot in the door and we come afterwards and try to get our share. We should be there from the very beginning with our high quality products. Those dairy producers – dairies, industries that are doing well – are those that are producing high-quality products; here, in particular, it is cheese. We have an extraordinary brand in Europe on high-quality cheeses, so why do we not use it and take our share? As the Minister said, we will look again at this issue in the health check. I am sure that will be as animated a debate as we have had today, because I think dairy production will never be boring.

  Elisabeth Jeggle, rapporteur. − (DE) Mr President, Commissioner, President-in-Office, ladies and gentlemen, we have heard a wide range of opinions. We were also able to detect that, for everyone here today, this is a serious issue not to be trifled with, that everyone has many concerns and that we are all, of course, accountable at home – to consumers on the one hand and to milk producers on the other.

To come back to the markets once again: whether I ought to believe in the Chinese market, I do not know. We see a great deal in this European Union and on this market today. However, we have an internal market here and this internal market helps us to be strong, even in the face of globalisation and general liberalisation. Let us therefore make a European internal market out of this milk quota. We used to be able to do this. The agricultural markets can face up to the challenges and particularly the routine fluctuations of the world market only from a strong, stable and organised internal market.

For sustainable management, the economy, ecology and social aspects must be in harmony. All three components must be equally to the fore of any action we take. The European agricultural model represents sustainability and consumer safety – and that still applies! Farmers do both very well. They look after the landscape and therefore form the basis of tourism, contribute to energy security, produce top-quality food and maintain the economic basis for rural areas by providing employment.

The social benefits are offset less and less for farmers by what are referred to as compensatory payments. Foodstuffs must increasingly have their fair price! Our overall political responsibility is greater than merely treading the path of liberalisation with open markets!

  President. − The debate is closed.

The vote will take place tomorrow at 12 noon.

Written statements (Rule 142)

  Constantin Dumitriu (PPE-DE), in writing. – (RO) The report drafted by Mrs Jeggle is extremely important not only in terms of the proposals concerning the increase in milk quotas, but also in terms of defining certain principles that we must take into account when discussing agricultural policy as a whole.

Following the discussions of the Commission on agriculture and rural development we agreed that an increase in milk quotas is necessary for the Member States starting as soon as 1 April 2008. In the EP, I represent Romania, a new Member State which was confronted even from the first year of accession with a crisis in the milk quota, which quota was insufficient to satisfy market demand and inconsistent with current realities. The milk sector in Romania recorded major progress from the negotiation of the milk quota in 2004 to accession, through investments in modern technology, extension of production capacities and employment of new personnel. Maintaining a milk quota at the level now provided would mean bankruptcy for investors, unemployment in rural areas specialised in the production and processing of milk and an increase in imports and the price paid by consumers.

The report represents a turning point as the European Union shows flexibility in solving a problem that several Member States are faced with. After all, the beneficiaries of this report are European citizens.

  Richard Seeber (PPE-DE), in writing. – (DE) The health check is an important process for reforming agricultural policy, particularly agricultural policy in mountainous regions. The increase in the application of the milk quota is essential in these areas. Special regulations must be decided here that are responsive to the particular circumstances of farming in the mountains. The work of farmers is being made more difficult owing to reduced accessibility and steep transport routes and these must be included in the discussions.

For Austrian farmers, the milk quota regulation is essential. EU-wide balancing out or trade in quotas should be considered. Were it actually to come to an abolition of the dairy quota system in 2015, appropriate financial compensatory measures would be needed with additional budget funds in order to maintain milk production and processing in mountainous regions and on grazing and pasture land.

When checking the efficiency of market support instruments and their reorganisation and adaptation to the current situation, the particular situation of farming in mountainous regions should not be disregarded in any instance. Milk production and processing is a very important component of agriculture in these regions and has a very high value. Particular attention must be paid to the economic, social and ecological consequences of an increase or abolition of quotas, particularly in mountainous regions. The complete abolition of the EU dairy quota system is the wrong path for Europe’s common agricultural policy.