On the eve of the informal meeting of EU agriculture ministers, the European Committee of the Regions cautions the Member States about increasing the crisis reserve in a tight budgetary situation, and calls for better regulation of agricultural markets.
In view of the fact that the various scenarios set out by the European Commission in the reflection paper on the future of EU finances forecast a significant reduction in the EU's agriculture budget, Karl-Heinz Lambertz (BE/PES), president of the European Committee of the Regions, reiterates the CoR's position that, "in order to make better use of the available budget, we need to regulate agricultural markets, not only to prevent sectoral crises but also because doing so is far cheaper than intervening at a later stage – as demonstrated by the recurring milk crises in recent years". The recovery in milk prices in early 2017 is partly explained by the milk production reduction scheme, which will have cost EUR 150 million. If this measure had been introduced earlier, it would have avoided the sharp increase in milk powder stocks to 355 000 tonnes, i.e. more than three times the ceiling set in the last reform, at a cost of more than EUR 600 million, with no effect on prices.
Moreover, the current rules governing international trade are a major source of volatility in agricultural prices. They therefore need to be changed to bring about fairer trade relations which do not undermine either European or third-country producers. In light of this observation, Guillaume Cros (FR/PES), vice-president of the Regional Council of Occitanie and the European Committee of the Regions' rapporteur on CAP reform, stresses that "the EU needs to use its influence as the world's biggest food importer and exporter to change the current agricultural trade rules so as to encourage greater fairness and solidarity in trade relations. We need to see the duty to stop exporting at prices below our production costs as being connected to the right to protect the EU from cheap imports that frustrate its production capacity."
Finally, the European Committee of the Regions reiterates that private risk management tools (futures markets and income insurance) are no substitute for government regulation, especially in times of depressed markets. In its opinion the Committee emphasises that income insurance schemes would benefit insurance providers rather than farmers and would prove expensive for taxpayers in the event that prices fell sharply, without addressing price volatility. As the rapporteur Guillaume Cros points out, "in 2016, the US's insurance scheme cost the public purse USD 5 billion, and mainly benefited the insurance companies, which raked in 4.8 billion while farmers received only 0.2 billion in aid".