60,000t of skimmed milk powder sold out of intervention for millions less than cost
The EU sold 60,000t of skimmed milk powder (SMP) this week, for significantly cheaper than it bought the product into intervention.
It's understood that approximately 60,000t of SMP was told at a minimum price of €1,451/t.
Typically, the Intervention scheme allows the European Commission to buy in 60,000t of butter and 109,000t of SMP between 1 March and 30 September each year, at set prices of €2,217/t and €1,698/t respectively.
This is the highest quantity ever sold in such tenders – bringing the remaining stocks down to 100,000t.
According to a source in the Commission, the price -145.1 €/100 kg- is a price which reflects the recovery of the dairy market after the difficult period the sector had to face.
They said it shows that the Commission's careful management of the stocks as well as the tool it made available to accompany producers towards more market oriented decisions can positively contribute to rebalancing the market.
In mid-November, 30,000t of SMP sold out of intervention at €1,251/t.
The November 6 tender saw offers made for the purchase of 62,887t. At the minimum sale price of €1,251/tonne set by the Commission, a total of 30,608t were sold.
The European Commission began to offer SMP intervention stock up for sale from December 2016, via a tendering process.
Between mid 2014 and the end of 2016 dairy markets experienced significant difficulties.
This was due to a combination of factors including increased global supply, the effects of the Russian ban on the import of EU agri-food products and reduced global demand, notably for dairy products in China.
During that phase of volatility, the EU Commission, responded to these difficulties through the deployment of support measures, including intervention provided for under the CAP
Key among these measures was the buying of skimmed milk powder (SMP) into intervention. Ireland's industry placed some 37,000t of product into intervention between September 2015 and the end of 2016.
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