The milk crisis : a revealing sign of past and upcoming changes for the CAP

On Monday 18th July, European Commissioner-Designate for Agriculture Phil Hogan announced that the EU would unblock 500 million euro funds in order to calm down the milk crisis in France. The aim is to slow down the milk production by paying the farmer for each liter of milk that he did not product.

There are numerous origins of the milk crisis, which took place not merely in France but also in Germany or Poland : russian embargo on agricultural goods, decline in Chinese demand and mainly : overproduction.

Indeed, since April 2015, the milk quota system has been abolished troughout the EU with the new CAP. This decision has been supported by the supporters of an very liberal agricultural market but also criticized because of the instability due to financial market that it creats. This decision led to think that the CAP has to be reexaminated. Initally a productive tool, CAP is now accused to be a part of the crisis. Many actors say that the EU is responsible because the CAP is funding many agricultural sectors that are already impacted by overproduction. And the CAP represents 66% of European overall budget, which means that this policy is too big to be ignored has to fine a new legitimation to exist.

The next reshaping of CAP will take place in 2020 and there are already many new options. However, there is not going to have a stepback for milk quota system as said the European executive : « politically is not an option and legally not possible ». That why the EU could get inspired by the Canadian system. Indeed, as explained the French vice-leader of Economic, Social and Environnemental Council Claude Cochonneau : « one third of the CAP budget » should get allocated to an agricultural insurance system (2% today). Many actors consider that the EU should stop funding overproductive sectors because it would prevent farmers to produce always more.