The final agreement on the mid-term review of CAP was a very satisfactory conclusion as far as Ireland is concerned across the deal as a whole. It is useful to outline the specifics of the agreement in relation to milk.
First, the quota regime was extended to 2014-15, thus providing producers and processors alike with a stable environment within which to plan for the future. In the absence of agreement on MTR, the quota system was due to end automatically in 2008. The reduction in intervention price support amounted to about 4% over and above what had already been agreed under Agenda 2000 in 1999. The fact that the additional reduction is compensated for at the rate of 80% means that its actual impact is very limited. That compensation amounts to almost 5 cent per gallon of the 6 cent per gallon intervention price cut. The net effect of the price reduction and increased compensation is a reduction in the farm gate price of €14 million per year – 1% of farm gate value.
The extent to which milk prices would actually reflect the support price reduction is dependent on a number of factors, in particular, the level of prices on the market, the type and range of products produced and the extent to which milk processors and the industry generally rely on intervention as an outlet. It should be recalled that the Commission's proposal would have resulted in a cut of 10% over and above Agenda 2000 with compensation only at the rate of 56%. The completely unfounded criticism in this area are based on adding the price reduction agreed four years ago in Agenda 2000 to the price reduction of 4% agreed last week – 80% of which is compensated for.