Fischler insists on need for reform of the dairy regime

Date: 14/01/1999

By Myles Neligan

AGRICULTURE Commissioner Franz Fischler will next week urge Germany and France to abandon their bid to exclude the dairy sector from the Common Agricultural Policy reforms, insisting that this is not a realistic option.

He is expected to argue that the h2 billion in budget savings which would be achieved by leaving dairy products out of the CAP overhaul do not justify a partial reform, pointing out that cuts in EU prices are urgently needed in order to make Union milk, butter and cheese more competitive on international markets.

The move to exempt the dairy sector is also vigorously opposed by Italy, the UK, Sweden and Denmark, which between them command enough votes to block the Franco-German proposal.

"Even if it were not for this blocking minority, the arguments for dairy reform are as strong in any other area," insisted a Commission official. "The international competitiveness of EU dairy products is dependent on reform."

Officials say governments' outright rejection of earlier dairy proposals put forward by Fischler's predecessor-but-one Ray MacSharry in 1992 has strengthened the Commission's determination to push through revisions to the EU dairy regime as part of the overall Agenda 2000 package of internal reforms.

Bonn's support for a partial CAP overhaul stems from its wish to reduce its contributions to Union coffers by negotiating a 'freeze' under which the EU budget would only increase in line with inflation until 2006. It hopes the savings which would flow from excluding the dairy sector from the CAP overhaul would be enough to make its plans for linking budget growth to inflation more acceptable.

France is supporting Germany's stance partly because it wants Bonn's support for changes to other parts of the CAP reform package and partly because French dairy farmers have few problems with the current regime.

But EU diplomats believe that France and Germany are unlikely to persuade the four countries in favour of dairy reform to set aside their objections. Most predict that a final deal based on one of three compromise proposals drawn up by Union officials last week will begin to take shape, probably at next month's meeting of farm ministers.

The option most likely to gain the support of a workable majority of ministers envisages retaining the milk quota system until 2006, while cutting prices by 10% and increasing national quotas by 2% over four years. The regime would be reassessed in 2003, when Sweden, Denmark, Italy and the UK would probably press for a more far-reaching reform.

Hopes that Bonn will eventually accept the inevitability of at least limited dairy reform were boosted this week when senior German farm officials took part in preparatory discussions on the details of the three compromise proposals, albeit without setting aside their government's basic stance in favour of a dairy-free CAP overhaul.