By Martin Banks - 15th October 2009
The commission's objective of keeping to a minimum level of regulation might rapidly prove impossible to fulfil
Court of Auditors
A European Court of Auditors report published on Thursday makes a damning indictment of EU dairy policy.
The report reviews how effectively the commission has managed the market for milk products, pointing out that milk production is of "major importance" to the EU's agricultural economy.
More than one million producers supply 148 million tonnes of milk annually.
However, in its conclusions, the court is critical of various aspects of the policy, saying it is blighted by "somewhat conflicting" objectives.
The auditors analyse the extent to which EU objectives in four key areas of its diary policy have been met, with the details given at a news conference in Brussels on Thursday.
On market equilibrium, the report concludes that milk quotas, introduced in 1984, have "effectively limited production but their level has proved to be too high for a long period of time".
The court recommends that monitoring the milk product market should continue so that liberalisation of the sector "does not lead once again to over-production".
"Failing this, the commission's objective of keeping to a minimum level of regulation might rapidly prove impossible to fulfil," it warns.
The report is also critical about another EU objective, stabilisation of prices, saying, "In real terms, the milk producer price has fallen continuously since 1984."
It says the "price formation process" in the food industry should be subject to regular monitoring by the commission.
A third aim of the policy is to ensure a "fair standard of living" for producers and, on this, the court says, "If the average income for milk producers has remained steady this is due to a variety of reasons."
It also points out that between 1995 and 2007 the EU lost half its diary farms, with the loss of 500,000 jobs.
"In-depth reflection should be given to tackle the special problems of those regions where milk production is most vulnerable and to tackle the environmental consequences of a geographical concentration of milk production."
With regard to competitiveness, the court notes that the EU share of world trade in milk products has been declining since 1984.
"The commission and member states should focus on satisfying the needs of the European market and on the production of products of high added value, such as cheeses which can be exported without financial assistance."
The report comes at a time of mounting criticism of EU dairy policy with farmers from all over Europe regularly descending on Brussels to air their grievances.
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