OBJECTIVE: the proposed regulation forms part of the group of proposals on the reform of the
common agricultural policy and translates the guidelines of Agenda 2000 in the milk and milk
products sector.
SUBSTANCE: the proposal seeks to establish a new common market organization for dairy
products. The main elements are as follows:
- improved competitiveness by a reduction in internal prices: the Commission proposes applying a
15% reduction in four equal steps to the intervention prices for butter and skimmed milk powder
(this decrease goes beyond the Agenda 2000 proposal). Intervention prices in the dairy sector will
no longer be fixed annually but for the whole period covered by Agenda 2000;
- the conditions for intervention remain unchanged except for butter, where intervention will be
explicitly restricted to produce originating in the Community;
- provisions concerning private storage aids and marketing measures will be adapted to existing
general rules. For school milk a Community aid level (95% of the target price) and a maximum
quantity per pupil (0.25 litre of milk equivalent) have been fixed. Provisions for butter purchases
have also been specified;
- the amount of direct support per producer will be based on the number of premium units, which
will be determined by dividing the individual reference quantity by the average milk yield in the
Community (support will be targeted on producers rather than quota holders);
- the amount of direct payment per premium unit follows the Agenda 2000 proposal but will be sub-divided into a basic payment common to all premium units and an additional payment according to
national provisions.
The basic cow premium will be phased in gradually by four equal steps in parallel with the reduction
in intervention prices. It will reach ECU 100 in the year 2003 and will remain at this level in
subsequent years;
- the provisions on trade with third countries will be carried over from current legislation.
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