Is intervention the best support mechanism?

Published 27 May 16

According to the EU Commission, it has used everything in its power to support the market through the current downturn. However, questions are being asked as to whether intervention is the most suitable support mechanism. At a time when milk production is expanding, intervention can be seen as simply a safety net for those who haven’t got a marketing plan to match their increase in milk production.

The chart below shows the EU28 countries who produced the most extra milk between 2014/15 and 2015/16. It then compares this with the volume of cheese and SMP in PSA or intervention stores at the end of March 2016 (in milk equivalent). In other words, how much of the extra milk produced by a country is currently sitting in stock?

Intervention 27may16

Source: MMO, Eurostat

The results are perhaps surprising. Indeed the three countries who have produced the most extra milk; Netherlands, Germany and Ireland, are not the countries who have the most product in storage. Between them they have 16% of their extra milk still sitting in intervention or PSA store. Belgium, on the other hand, has 86% of its extra milk sitting in store, with France at 68%. This suggests, that the three EU28 countries who have driven the biggest increase in milk production, are not over-relying on intervention to support their marketing plans.

The challenge for the EU Commission is whether there is a better way to support the market than the current intervention system. Support that encourages and rewards those who are driving a controlled expansion plan alongside a clear and achievable sales and marketing plan.