No profit for Commission on intervention scheme

Published 30 January 19

Unlike 2012, the EU Commission was not able to recover its money in the latest intervention programme. With less than 4,000 tonnes of SMP stocks left to sell, the net cost for running the programme looks to be in the region of €220 million, including storage costs[1]. This translates to around 0.06 pence for every litre of milk produced over the period in which intervention was open[2].

In total, the Commission purchased just under 395,000 tonnes of SMP at the fixed price of €1,698/tonne between July 2015 and September 2017, amassing a bill of around €670 million. While sales through the tender process started slowly, with only 220 tonnes sold in the first year, they ramped up in the latter part of 2018, with around 65% of stocks sold in the last six tenders.

The maximum tender price for the purchase of stocks remained below the buying in price in all but four tenders. However, it isn’t known how much volume was actually sold at the maximum tender price. Based on the minimum prices fixed by the Commission in each of the successful tenders, it is estimated that a minimum of €502 million was generated from sales, considerably less than the cost of the stocks.

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[1] Storage costs were estimated at €1.10/tonne/week, totalling €53 million. The monthly cost was calculated on the basis of monthly ending stock figures between July 2015 and December 2018.

[2] July 2015 to September 2017