EU Member States have agreed the first sales of Skimmed Milk Powder (SMP) out of public intervention, with little interest from buyers.
Only 40 tonnes - out of 22,000 tonnes for which bids were open - will be sold at a minimum selling price of €215.10/100kg. This price is higher than the current EU average price for skimmed milk powder of €201/100kg.
The tender to put on sale the skimmed milk powder that entered into public intervention before 1 November 2015 (e.g. 22 000 tonnes) out of intervention opened on 25 November. The quantities offered for sale represent roughly 6% of the total 355,000 tonnes which went into public storage in 2015 and 2016.
In total, bids offering different prices were received under this first tender for the release of 19.706 tonnes from intervention. Out of all the offers received, only those set at the minimum price of €215/100kg were deemed acceptable and they happened to concern only 40 tonnes.
Last month the European Commission announced its proposal to go ahead with a sale of Skimmed Milk Powder out of intervention following agreement from Member States. The Commission said the proposal was on the back of encouraging signs of recovery being seen on the European milk market, with an increase of about 10pc of the average price paid to producers in the last three months.
When the decision was taken to open the tender for sale, Commissioner Hogan had declared: "Reflecting the fragile nature of the recovery, the Commission will act with appropriate caution and the tender process will be under constant reassessment to prevent any unnecessary disruption."
The decision shows that selling at all costs was never an option for the Commission and that the maintenance of market balance and price recovery remained its main objectives.
A second tender for the sale of the remaining quantity is open with 3 January 2017 as the deadline for submitting offers.
The move to release these first volumes reflect signs of recovery being seen on the European milk market, with an increase of about 16% of the average price paid to producers in the last 4 months. Following a steady slow down, no more quantities of skimmed milk powder have been put into public intervention since September 2016, even though this market measure remains open.
