EU looks set to start selling SMP stocks

Published 31 January 18

The EU officially agreed to adopt the move to temporarily reduce the ceiling for intervention buying of SMP to zero for 2018 at the Farm Council meeting on Monday 29 January. This effectively means there will be no automatic buying of SMP up to the usual ceiling of 109,000 tonnes this year. Instead, a tendering process will operate as of 1 March, giving the Commission the ability to limit further additions to intervention stocks.

Intervention stocks currently stand at just over 358,000 tonnes following the prolonged downturn in dairy markets in 2015/16. While the Commission started to offer intervention stocks for sale via tender in December 2016, only 220 tonnes had been sold by the end of 2017.

The first tender of 2018 signalled a shift in the Commission’s selling strategy however. When questioned on their approach to managing intervention stocks at the recent Eucolait meetings, Commission representatives suggested they were now in ‘selling mode’. This was in reaction to rising milk production in the EU, and a perceived need to send a signal that the market was moving towards an oversupply situation. It was suggested that while the disposal of intervention stocks may put pressure on market prices, the industry needed to adjust production levels to market demand, and these sales would provide the correct market signal.