EU Intervention Stocks

Published 30 November 17

Intervention

Intervention allows the European Commission to buy in 60,000 tonnes of butter and 109,000 tonnes of SMP between 1 March and 30 September each year, at set prices of €2,217/tonne and €1,698/tonne respectively.

It aims to provide a minimum floor in the market during times of low pricing. After the volume limit is reached, product can then only be offered into intervention through a tendering process, rather than at the set prices.

Due to the current high stock levels, the Commission have proposed the removal of  'fixed price' buying in of SMP stocks when intervention re-opens in March 2018. 

The effect of this change, if approved, is that all selling into intervention would be through a tender process, providng the Commission the opportunity to limit (or avoid) any further stock accumulation. 

Final adoption by the Council of the proposal is expected to take place in December. 

A further 22,712 tonnes of SMP were offered into public intervention during August and September, bringing the total tonnage placed into intervention since 1 March 2017 to 30,649 tonnes.

 

SMP offered into public intervention (tonnes)*

cumulative total

  UK EU
2015 total 1,048 40,280
2016 total (fixed price and tender) 5,270  334,551
2017:
02-Jan to 20-Mar 0 0
27-Mar 0 472
03-Apr 0 1,201
10-Apr 0 2,669
17-Apr 0 3,680
24-Apr 0 4,565
1-May 1,132 6,554
8-May 0 7,365
15-May 30 7,937
7-Aug-17 47 7,984
21-Aug-17 735 8,719
28-Aug-17 1,325 10,044
4-Sep-17 1,117 11,161
11-Sep-17 2,891 14,052
18-Sep-17 5,512 19,564
25-Sep-17 11,085 30,649
Intervention closed until 1 March 2018

 Source: MMO

*Totals may not match MMO figures due to rounding. Please note these figures are subject to revisions.

The European Commission began to offer SMP intervention stock up for sale from December 2016, via a tendering process.

Of the 13 tenders for the sale of intervention stocks to date, four have been successful, accounting for 220 tonnes of product. At the most recent tender on 21 November, offers were made for the purchase of over 33,000 tonnes, although only 40 tonnes was sold at a price of €1,390/tonne, which is just over the prices paid for feed grade SMP.

 Tender date  Volume sold (tonnes) Price (€/tonne) Volume available for next tender (tonnes)
 13-Dec-16  40  2,151 21,962 
 03-Jan-17  0  - 21,962 
 17-Jan-17  0  - 21,962 
07-Feb-17  0  - 21,962
21-Feb-17  0  - 21,962
07-Mar-17 0 - 21,962
21-Mar-17 0 - 21,962
18-Apr-17 0 - 21,962
16-May-17 0 - 21,962
20-Jun-17 100 1,850 21,862
18-Jul-17 0 - 21,862
19-Sep-17 0 - 21,862
17-Oct-17 40 1,441 21,822
21-Nov-17 40 1,390 21,782

Source: MMO

*Totals may not match MMO figures due to rounding. Please note these figures are subject to revisions.

The 2015 intervention scheme was extended by three months in light of ongoing market difficulties, to run until 31 December 2015. A new scheme then immediately opened on 1 January 2016 with the volume limits reset, due to remain open until 30 September 2016. The European Commission extended this scheme for SMP, keeping it open until 31 December 2016. It then opened a new 2017 scheme for SMP, which will be available from 1 January - 30 September 2017.

SMP volumes reached the original ceiling on 31 March 2016 and SMP offers between 1 April and 19 April were subject to tendering. From 20 April, the European Commission officially raised the volume ceilings for the 2016 campaign, due to ongoing market difficulties. The new limits allowed a total of 100,000 tonnes of butter and 218,000 tonnes of SMP to enter at fixed prices.  

On 24 May 2016, the new 218k tonne volume ceiling was reached for SMP, and offers became subject to a tendering procedure once again. The ceiling for SMP was then raised to 350,000 tonnes for 2016 and buying-in resumed at the fixed price. 

No butter has been offered into intervention in 2015-17.

PSA

In October, only 24 tonnes of SMP were removed from PSA (the scheme is closed to new additions), all from France. 135 tonnes remain of the UK stocks. Cheese** and butter stocks in private storage are now at zero in the UK, and 66 tonnes of butter remain in PSA (in Ireland).

 PSA stock movement (tonnes)*
 Oct-17
    Butter SMP Cheese
UK in 0 0 0
  out 0 0 0
  balance 0 135 0
EU in 0 0 0
  out 0 24 0
  balance 66 6,177 0

 Source: MMO

*Totals may not match MMO figures due to rounding. Please note these figures are subject to revisions.
**Stock levels for cheese in PSA were revised by the Commission, indicating that these had been removed by April 2017 (the maximum storage period subject to aid was 210 days)

 

PSA stocks

 

The European Commission re-opened Private Storage Aid (PSA) on 5 September 2014 in response to the threat of market disruption due to the loss of the Russian export market. PSA is a payment made by the European Commission to processors in return for keeping products in storage and off the market for an agreed period of time. The scheme covers butter, SMP and cheese. 

PSA was extended to remain open until 30 September 2016, due to ongoing market difficulties.The butter and cheese schemes closed on this date but PSA for SMP was extended further and closed on 28 February 2017. 

Additional PSA schemes for SMP and cheese were agreed last year as part of the Aid Package agreed by the Commission on 7 September 2015. The new SMP scheme allows manufacturers to store product for one year and pays a higher rate of aid. For cheese, the new scheme allowed for up to 100,000 tonnes of cheese to be put into storage at subsidised rates, distributed among Member States according to cheese production levels. This was after the initial cheese PSA scheme was repealed on 23 September 2014 due to a disproportionate surge in offers from cheese producing countries not traditionally exporting significant quantities of cheese to Russia.