Since the launch of a tendering procedure in November 2016, only 40 tonnes of the total 354,000 tonnes of Skimmed Milk Powder (SMP) stock held in public intervention across the EU has been sold.
This stock built up over the course of the dairy crisis in 2015 and 2016, as part of a set of EU measures to support the market. Now the EU is struggling to off-load the stock, dampening SMP prices significantly.
Member States once again rejected all bids at the 9th tender in May, as they fell short of the prevailing market price of €180/100kg. Poland was the only country to submit bids (with offers ranging from €138/100kg to €163.41/100kg), showing the decreasing interest among operators now that we have hit peak production season and more fresh product is available.
In response to calls from Copa-Cogeca, supported by ICOS, and other industry groups, the Commission has begun considering other options to remove the stock, including possibly using it for humanitarian aid in Sudan and Syria or selling it to international operators, with interest noted from Mexico. In order to do this the Commission would have to broaden the scope of the regulation, as under the current rules, tenders are only open to EU registered companies.
A further 7,360 tonnes have been placed in public intervention since it opened again in April this year, less than what was initially anticipated, with market prices improved from a low base. The next tender will be held on Thursday, June 15.
By Alison Graham
European Affairs Executive
29 Jan 2021