Academy of Economic Studies Bucharest

Faculty of Agro-food and Environmental Economics

COMMON MARKET ORGANISATION in

MILK AND MILK PRODUCTS

Students: Bracaci
Florentina
Sandu Alina
Scrimint
Gabriela Cristiana
Serbu Natalia
Gabriela
Sima
Andrada Luminita
Year: III
Group: 1335
Series: C
Group PAC: 1
 Universitary year
-2009-

Summary

Chapter I Common Market Organization in milk and milk products in

the European Union
1.1 Act and scope of the Common Market Organization in milk and
milk products

1.2 The main instruments that regulate the market in milk and milk
products

Chapter II Common Market Organization in milk and milk products

in Romania
2.1 Romania’s position

2.2 Romania’s demands

2.3 Overview of the Romanian milk sector

2.4 Negotiation results

Chapter III Conclusions

 Chapter I
Common market organization in milk and milk products in the
European Union
The common organisation of the market in milk and milk products enables prices to be
stabilised and farmers guaranteed a fair standard of living through the implementation of systems of
intervention, marketing and trade with Non-EU Member Countries.

1.1 Act and scop of the common market organisation of milk

Act
Council Regulation (EC) No 1255/1999 of 17 May 1999 on the common organisation of
the market in milk and milk products.
This Regulation contains a comprehensive legislative framework for the common
organisation of the market in milk and milk products. Before the adoption of this Regulation,
legislation for these products, starting with the first Regulation of 1968, was fragmented.
This CMO provides for a system of intervention within the framework of the internal
market and certain support measures for European products when they are traded on the world
markets.
Scope
The Common Market Organisation for milk covers:
• milk and creams;
• buttermilk, yoghourt and kephir;
• whey;
• butter and other fats;
• cheese and curd;
• lactose and lactose syrups;
• preparations used as animal feed.

1.2 The main instruments that regulate the market

Internal market
This is to run annually from 1 July to 30 June. The intervention prices for 100 kg of butter are:
• EUR 328.20 from 1 July 2000 to 30 June 2004,
• EUR 305.23 from 1 July 2004 to 30 June 2005,
• EUR 282.44 from 1 July 2005 to 30 June 2006,
• EUR 259.52 from 1 July 2006 to 30 June 2007,
• EUR 246.39 as from 1 July 2007.
The intervention price for 100 kg of skimmed milk powder is EUR 169.80.
Intervention and private-storage arrangements
Intervention agencies in each Member State buy in butter at 90% of the intervention
price during the period 1 March to 31 August of any year, on the basis of specifications to be
determined.
The Commission may suspend intervention if the quantities offered exceed 30 000 tonnes
in 2008 and subsequent years. The butter bought in must have certain characteristics and meet
certain requirements. Private storage aid may be granted for salted or unsalted butter produced from
cream or milk.
The aid amount is determined in the light of storage costs and the likely trend in prices
for fresh butter and butter from stocks. Butter bought in by the intervention agencies is to be
 disposed of in such a way as to avoid disturbing the balance on the market.
The intervention agencies of the Member States buy in skimmed milk powder at the
intervention price between 1 March and 31 August. That milk must comply with certain
composition characteristics, particularly as regards minimum protein content, which must be 34%
of the non-fat dry matter. The Commission may suspend intervention if the quantities offered
exceed 109 000 tonnes.
Private-storage aid is granted for certain cheeses, such as Grana Padano, Parmigiano
Reggiano, Provolone, sheep's and goat's milk cheese, as well as long-keeping cheeses. The aid
amount is determined in the light of storage costs and the likely trend in prices. Where the market
situation so requires, the Commission may decide to remarket the various cheeses stored.
Special marketing aid
Aid is available for:
• producers of skimmed milk and skimmed milk powder (including buttermilk and buttermilk
powder) used for animals, provided that these products meet certain conditions;
• skimmed milk processed into casein and caseinates;
• the purchase of cream, butter and concentrated butter by non-profit bodies, by manufacturers of
certain food products and for direct consumption.
School milk aid
In order to encourage children to drink milk, aid for the supply of 0.25 l of milk
equivalent per pupil and per day is paid to educational establishments. The Community aid is EUR
18.15 for 100 kg of all types of milk. Member States may grant additional aid.
Trade with Non-EU Member Countries
Imports and exports may be subject to issue by the Member States of an import/export
licence. In general, in trade with Non-EU Member Countries, milk and milk products are subject to
the rates of duty in the common customs tariff; taxes having equivalent effect to customs duty
and the application of quantitative restrictions or measures of equivalent effect are prohibited.
However, additional duty may be charged under the conditions set out in the
agriculture agreement of the World Trade Organisation (WTO). The Community informs the WTO
of the trigger prices below which additional duty may be charged. In addition, under certain
circumstances, tariff quotas may be awarded using the first come/first served principle, the
simultaneous examination method, the traditional importers/new arrivals method, or other non-
discriminatory methods. In the case of exports, the difference between prices on the world market
and Community prices may be covered by export refunds.
These are awarded using the method considered the most suitable and creating the
lightest administrative burden. The refund amount established takes into account a series of factors,
such as the price of the milk and the costs of marketing. In certain cases, such as where the free-at-
frontier price significantly exceeds the Community price and threatens to cause long-term
disruption to the proper functioning of the Community market, the Community may fully or
partially suspend import duties and even collect export levies.
Safeguard measures may be taken if the Community market is threatened with
serious disturbance by reason of imports or exports. In addition, under certain circumstances,
recourse to inward processing arrangements may be prohibited.
Committee procedures
In implementing the Regulation, the Commission is assisted by a Management
Committee for Milk and Milk Products ( FR ), comprising representatives of the Member States and
chaired by a representative of the Commission.
Milk quotas
Council Regulation (EC) No 1788/2003 of 29 September 2003 establishing a levy in the milk
and milk products sector. With effect from 1 April 2004, for eleven consecutive periods of twelve
months, the Member States collect a levy from farmers on quantities of cow's milk or other milk
products marketed during the relevant twelve-month period in excess of the maximum reference
quantities allocated to each Member State.

National quotas

Member State Quantities (tonnes)

Belgium 3 427 288,740
Bulgaria 998 580,000
Czech Republic 2 792 689,620
Denmark 4 612 619,520
Germany 28 847 420,391
Estonia 659 295,360
Ireland 5 503 679,280
Greece 836 923,260
Spain 6 239 289,000
France 25 091 321,700
Italy 10 740 661,200
Cyprus 148 104,000
Latvia 743 220,960
Lithuania 1 738 935,780
Luxembourg 278 545,680
Hungary 2 029 861,200
Malta 49 671,960
Netherlands 11 465 630,280
Austria 2 847 478,469
Poland 9 567 745,860
Portugal 1 987 521,000
Romania 3 118 140,000
Slovenia 588 170,760
Slovakia 1 061 603,760
Finland 2 491 930,710
Sweden 3 419 595,900
United Kingdom 15 125 168,940
 Chapter II
Common Market Organization in milk and milk products in
Romania

In the perspective of accession to the EU, the Romanian dairy sector will have to comply
with the EU norms and standards. Institutional capacity building, the creation and operation of
certain specific market structures, sector revamping until the accession moment represent a
priority objective of the domestic agricultural policy. The calculations regarding the EU direct
support reveal that Romania will need additional funding sources in order to cover the needs in
relation to the allocated milk quota.

2.1 Romania’s position

Romania fully supports the EU acquis on Chapter 7 - Agriculture, in force on 31

December 2000 and will be able to apply the acquis on its accession to the European Union, with
the exceptions listed in this position. Milk and milk products (regulation EC no. 1255/99 on the
common market organization of milk and dairy products and other relevant regulations for
implementation)
Acceptance of the acquis
Romania accept the acquis in the field and does not require the transition period.
Romania require a rate of production of milk 7500 tons in 2007. Romania has a herd
of 1600 head thousand cows milk.
In 1996 production of cow milk has reached the highest level in the period 1989 -
2000, about 5500 thousand tons. Unlike the 1996, in 2000 the production of cow milk has
decreased by 8%.
In the period 2002 - 2006, reorganization holdings specializing in restructuring and
product chain, to grant financial incentives for increasing efficiency of cattle (first / liter of milk
delivered to processing in compliance with conditions imposed by the quality, value
1.400lei/litru in 2002, first for heifers at first calving, etc..), and stimulating and full recovery of
natural conditions and possibilities of human power and the existing tradition of cattle raising in
general and dairy cows, especially in terms of improved genetically will lead to the production of
7500 thousand tonnes in 2007 (excluding the technology for calves and autoproducers).
According to R 1255-99, Chapter IV - direct payments, 16, Romania takes note of the
fact that, starting with the date of accession, national producers will be included in the criteria
Community award the first milk set per calendar year per holding and per tonne of individual
reference quantity eligible and available at first at the farm.
In accordance with R 1255-99, Chapter IV - direct payments, Article 17, require
Romania The annual award, starting with the date of accession, the additional payments in the
form of:
 additional premiums (Article 18)
 area payments (Article 19, per hectare of permanent pasture, in conjunction with
Article 15 (3), R 1254-99)
Romania will not later than 31.12. 2004, the overall amounts totaling additional fees
will be awarded from the date of accession (R 1255-99, Chapter IV-direct payments, Article 17).
Period 1990-2001
 Number of dairy cows, held today in the vast majority privately owned (98%)
decreased by 24% in 2000 compared with 1989. In the last period recorded an annual decline
of 1% which means reducing the decline. Farm size of dairy cows is 1.4 heads / farm average.
80% of the herd of cows and heifers is increased peasant households with 1-2 heads, 4% to 3-
5% heads and 3% with 6 to 15 head.
Milk is one of the important products of the Romanian agriculture, the sector
contributed to total value of agricultural production, representing 15% in 1999. Approximately
95% of the total production of milk is obtained in the private sector, supplying the largest
quantity of milk for processing.
Between 1989 to 2000 (except the years 1990 and 1992), total milk production
has increased steadily. In 1996, production of cow milk has reached the highest level in the
period 1989 – 2000, 5500 thousand tons. Unlike the 1996, in 2000, production of cow milk has
decreased by 8%. Average production per cow in the period 1990 - 2000 was between 2000 -
3100 liters / cow / year.
Of the total production of milk, 13% represents consumer technology (feeding calves),
20% milk raw materials supplied by the population for specialized processing units, 25%
delivered directly to consumers on the free market, and 42% represents autoproducers.
Total Consumption of milk and milk products in milk equivalent was relatively
constant, in Romania, it is situated around the value of 193 l / head / year.
During 1993-1997, the evolution of milk production was determined by the support of
the state milk and milk products by: coupon scheme value and the premium for milk delivered
for processing.
Sector development strategy provides the following objectives:
 Increase by 5% -6 annual herd of dairy cows and heifers by 2007.
 Growth with approx. 10-15% of total annual production of milk by 2007.
 Supporting private keeprs by providing subsidies on the product of low interest
credits, allowances, bonuses, reduced taxes, insurance and reproductive material feed, in
order to improve performances of the production of biological material and establishment
of effective livestock farms.
 Support formation of inter-professional organizations on the product.
It was adopted Emergency Ordinance of the Romanian Government nr.108/2001 on
agricultural holdings, which provides a minimum of 15 head for business holdings. It was
developed and is currently in approval Animal Industries Act, which contains provisions relating
to growth and improvement animal, and improve pastoral fund operation, production, circulation
and use of feed. Law will be adopted in 2002.
Adopt and implement the acquis
By Order nr.307/2001 of the minister of agriculture, food and forests was held in the
MAAP Office milk in the Directorate General Strategies and Policies in Zootechy.
The main tasks of the Bureau milk will be: implementation of monitoring of livestock,
production and market development and policy implementation in the production and processing
of milk.
The calendar of adopting European requirements, provides:
Develop surveys and pilot studies performed between 2002 - 2004, on the areas of
milk production, milk quality on the consumer (the default raw milk), modernization activities of
milk collection, upgrading of laboratories for analysis, organization and functioning of
monitoring systems to producers of milk and processing of milk
Results will be materialized in:
  update the database on milk quality parameters of raw materials, according to
European and determination of freezing point average area of origin for proper appreciation
of counterfeit milk
 setting options and measures to improve milk quality raw materials and the current
system of collecting milk
 assessing the costs needed to ensure quality, modernize the system of milk collection,
upgrading of laboratories (for quick determination of the freezing point, fat, density and
protein content)
 assessment costs of the reference laboratories of producers associations;
 Evaluating the costs for the organization and functioning of an effective system of
monitoring and reporting data on quality of milk and dairy products to the authorities
concerned.
Develop in 2002-an order of the minister of agriculture, food and forests to approve
the rule on Trade names and conditions quality of milk sold for human consumption (EC
Regulations no. nr.1602/1999 and 2597/1997). Since 2003, the requirements for fat content and
density, and partially requirements regarding the determination of the freezing point and the
protein content, which will be completed in 2006.
Develop, in the period 2002 - 2005, Orders of the Minister of Agriculture, Food and
Forestry to approve Rules for the protection of trade names and conditions of quality dairy
products, and methods for the analysis, the reference for determining the parameters for quality
milk and milk products and to determine tracers. Implementation will be gradual, in the period
2003 to 2007.
Involvement in the period 2002 - 2007, a national association of employers and
industry associations milk to livestock farmers in the implementation of national legislation
harmonized with EU legislation in this area.
During 2004 - 2006, Agency for Payments and Intervention will take, in milk and milk
products, necessary for the administration of:
a. The intervention (intervention butter for public aid for private storage of cream and
butter intervention for skimmed milk powder, aid for private storage of skimmed milk powder
and cheese)
b. Measures marketing (aid for skimmed milk powder and skimmed milk used for
feeding animals, aid for skimmed milk processed into casein and caseinates, aids for the
purchase price reduced cream, butter and concentrated butter for the non-profit organizations,
military units or similar, pastries shop and the ice cream manufacturers, manufacturers of feed
and direct consumption of concentrated butter, providing aid for dairy products in schools)
c. Quotas for milk
d. Direct payment system
In 2002, raw milk for processing and consumption is obtained from households spread
over 284,661 farms and cattle BUFFALO farms and about 898,409 sheep. In these farms have a
numer of 2-10 animals producing milk. Raw milk obtained from farms and other large units
organized maximun represents 20% of total quantity of milk. In these circumstances, the peasant
household has no potential for financial provision and implementation of measures which ensure
obtaining milk from the parameters as required by EU legislation.
In this context, it should be possible to continue trading on the market for a period of 3
years after the accession of raw milk with a content of 400 000 plate 500 000 somatic cells per
ml. front plate 100 000 respectively as 400 000 cells provides directives.
Dairy products are produced in 374 units, of which 11 meet the standards of hygiene
required by EU legislation for the production of milk powder, there are 2 units (not milk powder
factory and feed).
 2.2 Romania’s demands

Romania is ready to examine the development of legislation which came into force
after 31 December 2000 and to systematically inform Accession Conference for the Association
or the Council on legislation and implementation measures implementing the new acquis or, if
necessary, on the difficulties that may arise in the transposition of the new acquis.
Romania require:
 A transition period of 5 years, until the date of 31.12.2011, which can adopt safeguard
measures on imports of agricultural products or from one or more Member States, if such
imports cause or threaten to produce disturbance of the Romanian market of agricultural
products.
 A transition period of 4 years, up to date 31.12.2010, for vineyard inventory and
organizing a Community register of them (Regulation 2392/86 and Regulation 649/87).
 A transition period of 8 years, until on 31.12.2014 for the removal of a living culture
of hybrid direct producers (regulation 1493/99)
 A transition period of 3 years, until the date of 31.12.2009, in order to implement
national policy for vaccination for classical swine fever (Directive 80/217 CEE)
 A transitional period of 3 years, up to date from 31.12.2009, for modernization and
technology units cutting and processing meat, according to the requirements of the
Community (Directive 64/433/CEE, Directive 77/99/CEE, Directive 94/65/CE, Directive
92/118/CE Directive 71/118/CEE, Directive 91/495/CE Directive 92/45/CE);
 A transition period of 3 years, up to date 31.12. 2009, to modernize technology and
processing units for milk and for the collection centers and the standardization of milk,
according to the requirements of the Community (Directive 92/46/CE, 95/342/CEE
Decision)
 a period of 3 years of transition, until the date of 31.12.2009, to comply with EU
requirements on animal farms and milk quality of raw milk obtained (CE Directive 92/46
and Council Decision 89/362 CEE).
On milk and milk products, Romania requested:
• a share of milk production of 7.5 million tons for 2007, which was revised to 5 million tons,
the rate was only in production of milk cow and buffaloes without milk sheep and goat, and
not including the cows and autoproducers.
• taking into account the fat content of a reference of cow milk by 3.6%
• protection of Romanian food, including traditional, by registering them in accordance with
EEC regulation nr.1107/96 on registration of geographical indications and designations of
origin for agricultural products and foodstuffs, their list will be presented the European
Union in 2003. Regarding requirements Regulation Regulation 2991/94 and 577/97 on the
fats in 2002 will be adopted common order minister of agriculture, food and forests minister
and health and family standards, definition, designation and presentation of vegetable oils
and fats and standards, definition, designation and presentation of butter and fats of animal
origin. Implementation will be made during 2003 to 2004.

2.3 Overview of the Romanian milk and milk products sector

In its effort to integrate into the European Union agro-food system, we find the
milk and milk products sector highly relevant. The Romanian agriculture is defined by
self-consumption and atomized agricultural structures and this aspect affects its economic
performance. In this respect, Romania hopes to fallow the same rules and adopt the same
legislation as the European Union.

Milk is a perishable product that demands the consolidation of a logistical system.

The collecting process is difficult due to the large numbers of exploitations which provide
only small quantities of milk. Milk production varies from season to season (the
production is highest during summer time when grass availability increases). The demand
for milk, however, remains the same for the whole year. Growing cattle is a mean of using
the potential of natural pasture and hayfields.
Now there are approximately 1 400 000 holdings grows 1 700 000 cattle, hence a
farm generally grows 1 or 2 heads.
Milk Animals (Head)
year

country item 1998 2005 2006 2007

168000 159200 165800 166900
Romania Cow milk, whole, fresh
0 0 0 0
619800 544550 544550 545000
Romania Sheep milk, whole, fresh F F
0 0 0 0
787800 703750 710350 711900
Romania Milk,Total + A A A A
0 0 0 0
A = May include official, semi-official or estimated data | F = FAO estimate
FAOSTAT | © FAO Statistics Division 2009 | 27 February 2009

Milk Animals (Head)

9000000
8000000
7000000
6000000
5000000
4000000
3000000
2000000
1000000
0
1998 2005 2006 2007
heads

Cow milk, whole, fresh Sheep milk, whole, fresh Milk,Total +

The total amont of producing animals (heads) has dropt significantly since 1998. The
numbers show a decrease with almost 10% by 2007. While the number of cows used for the
production of milk remains relatively the same, the number of sheep has reduced up to 12%
since 1998 to 2007, proving a an increasing demand for cow milk instead of sheep milk.

Land fund (thousand hectares)

2004 2005 2006

Total area of the 23839,1 23839,1 23839,1

 land fund

Pastures 3346,9 3364,0 3334,4

Hayfields 1498,4 1514,7 1524,9

Source: National Institute of Statistic, Romania 2009

Land fund

30000
thousand hectares

25000

20000
Total area of the land fund
15000 Pastures
Hayfields
10000

5000

0
2004 2005 2006

In this table, we have the total area of land fund and the pastures and hayfields
which represent the means of growing cattle. Pastures represented in 2004, 14% of the
total area of land fund, while the hayfields represent only 6,3%. In 2007 the proportions
remain the same.

Livestock per 100 hectares of land

Romania 1996 1997 1998

Cattle 24,2 22,7 22,1

Sheep and goats 72,6 67,1 63,2

Source: National Institute of Statistic, Romania 2009

 Livestock per 100 hectares of land - Romania

80 72,6
67,1
70 63,2
60
50
Cattle
40
Sheep and goats
30 24,2 22,7 22,1
20
10
0
1996 1997 1998

The number of cattle, sheep and goats per 100 hectares of land has decreased
gradually from 1996 to 1998. The biggest decrease was that of goats and sheep, their
number dropped 13%.
Most of these exploitations use the milk production for self-consumption.
Normally, the milk production obtained from the farms should enable the food industry to
have raw material. The privatization process in Romania, has begun in 1999 and has
gathered by now, over 800 private factories of milk processing.
Due to the scarce resources, the total capacity for production in these factories is
not entirely used. Some only reach 35% of their total capacity. Production of milk has
increased, annually, Romania is recording productions of up to 54 000 000 hectoliters.
Out of this total amount, only 24 000 000 hectoliters of milk are actually sold and thus
represent only 47% of the potential. Half of the milk production is directed towards self-
consumption.
Production (tonnes)
year

country item 1998 2005 2006 2007

451192 500780 601145 544113
Romania Cow milk, whole, fresh
4 0 2 9
Sheep milk, whole,
Romania 354000 544400 650790 484578
fresh
486592 555220 666224 592571
Romania Milk,Total + A A A A
4 0 2 7
A = May include official, semi-official or estimated data | F = FAO estimate
FAOSTAT | © FAO Statistics Division 2009 | 27 February 2009
 Milkproduction
7000000
6000000
5000000
4000000
3000000
2000000
1000000
0
1998 2005 2006 2007
Cow milk, whole, fresh 4511924 5007800 6011452 5441139
Sheep milk, whole, fresh 354000 544400 650790 484578
Milk,Total + 4865924 5552200 6662242 5925717

The total milk production in Romania has increased in 2007 since 1998 with up to
22%, the largest production registered so far being that of 2006. Cow milk production may
very well be responsible for the growth recorded in the milk sector, as it also registered an
increase in 2007 with up to 20%. Sheep milk production registered an increase in 2007 of
almost 36%, despite the fact that the number of sheep heads had reduced in 2007
compared to 1998.

Milk products
Production (tonnes)
year

country item 1998 2003 2004 2005

Romania Butter and Ghee + 6355 A 6000 A 7154 A 8000 A
4782 4900 5300 6100
Romania Cheese (All Kinds) + A A A A
0 0 0 0
Romania Evaporat&Condensed Milk + 485 A 485 A 625 A 1445 A
Romania Skim Milk&Buttermilk,Dry + 6700 A 7800 A 7800 A 7800 A
A = May include official, semi-official or estimated data
FAOSTAT | © FAO Statistics Division 2009 | 27 February 2009
 Milk products - Romania

Production (tonnes)
70000
60000
50000
40000
30000
20000
10000
0
1998 2003 2004 2005

Butter and Ghee + Cheese (All Kinds) +

Evaporat&Condensed Milk + Skim Milk&Buttermilk,Dry +

Analyzing the data for milk products we can observe that a considerable increase has
been registered in almost all the fields. Butter and Ghee production has increased since 1998
with almost 26%. Cheese production has increased with almost 28% and skim milk and
buttermilk has registered a growth of 16%. The most shocking increase is that of the
evaporate and condensed milk production with almost 200% from 1998 to 2005.
Although the yield has registered rising values over the past years, it has yet managed
to reach the average imposed by the European Union (6,062 l/head).

Yield (Hg/year)
year

country item 1998 2005 2006 2007

2685 3145 3625 3260
Romania Cow milk, whole, fresh F F F
6 6 7 1
Sheep milk, whole,
Romania 571 999 F 1195 F 889 F
fresh
Romania Milk,Total + 6176 F 7889 F 9378 F 8323 F
F = FAO estimate
FAOSTAT | © FAO Statistics Division 2009 | 27 February 2009

Yield (Hg/year)

40000
35000
30000
25000 Cow milk, whole, fresh
20000 Sheep milk, whole, fresh
15000 Milk,Total +

10000
5000
0
1998 2005 2006 2007
 Milk and dairy products’ consumption in Romania is 246,6 kg/capita which is a value
close to the European Union’s value of 255,11 kg/capita.

Yearly average consumption per inhabitant (liters)

Year 2004 2005 2006

Milk and dairy 238,9 239,2 246,6

products in
equivalent litres
(milk 3,5% fat
(butter excluded)

Source: National Institute of Statistic, Romania 2009

Yearly average consumption per inhabitant

248

246

244
Milk and dairy
242
litres

products in equivalent
240 litres (milk 3,5% fat
(butter excluded)
238

236

234
2004 2005 2006

This table gladly shows us that the average consumption per inhabitant has grown
in 2006 and with 3,2%.Statistics prove that milk and dairy products consumption varies
according to the type of occupation and the origin (urba/rural).Prices for milk have been
controlled by the state on the local market until 1997. After its liberalization, the prices
grew rapidly. In recent years however, there has been recorded a drop in milk and dairy
products.

Consumer price indeces

November 2008 December 2007

Milk - Total 100,93 108,70

Cow milk 102,02 119,29

Cheese - Total 101,70 120,00

Caw cheese 101,56 121,77

Sheep cheese 102,06 120,27

 Butter 100,29 105,84

Source: National Institute of Statistic, Romania 2009

Consumer price indeces

140

120

100

80 November 2008
60 December 2007

40

20

0
Milk - Cow Cheese - Caw Sheep Butter
Total milk Total cheese cheese

Analyzing this table we find that the prices for each milk product have dropt
considerably from 2007 to 2008, cow milk having registered decrease of 14%, cow cheese
of 17% and sheep cheese of 13%.

2.4 Negotiation results

In the milk sector the negotiations were tough because barely 40% of the milk
produced in the reference period, in Romania, is in line with the Community quality parameters
(germs, somatic cells, etc). In this sector we negotiated a quota of over 3 million tons, out of
which more than 1 million for deliveries to processing units and almost 2 million for direct sales
to consumers as well as a restructuring quota (own consumption in households) of 188.400 tons.
I must draw the attention of the producers from both sugar and milk industry
that they have to focus on productivity in order to be competitive. In the case when in two
consecutive years they do not produce at the level of the negotiated quotas, they risk to loose
these quotas.

Transitional periods and other arrangements obtained by Romania:

1. Romania requested and obtained a transitional period of 3 years, until 31.12.2009, for
modernizing and re-vamping the milk processing units (28 units), as well as for the organizing
the milk collecting and standardization centers in compliance with the Community requirements.
2. Romania requested and obtained a transitional period of 3 years, until 31.12.2009, for
complying with the Community structural requirements regarding cow milk farms and the
quality of raw milk obtained.
3. Regarding the share of milk, Romania requested a quota of 5 million tonnes for the
production of milk cow and buffaloes, except milk for calves and autoproducers, but was granted
a quota of 3 million tonnes of milk.

Quote (t) Yield Necessary for Current

 (t/year) effective. Staff
negotiated rates or
ceilings (head)
Cow milk 3.057.00 3,7
0
826.216 1. 741.551
Cattle 1.835.000 2. 897.100
Sheep 5.880.000 7.446.861

- The financial support obtained within the negotiations for Chapter 7 – “Agriculture” is
of approximately 4,721 milliard Euro for the period 2007 – 2009, out of which 3,921 milliard
Euro are allocated for the mechanisms of the Common Agricultural Policy and rural
development (Chapter Agriculture) and around 0,8 milliard Euro are estimated to be allocated
for projects financed from structural funds (EAGGF – Guidance).
- For agriculture, the payments will be gradually introduced during 10 years, starting
with 25% of the level of direct payments allocated to the 15 member states of the EU. This
gradual introduction of the direct payments is based on the same principles as applied in the case
of the 10 new member states.
- The financial support proposed for the direct payments for Romania during the three
years is of 881 million Euro, which includes the financial support for the products or sectors
where quotas, reference areas or national ceilings are established. This type of financial support
does not require co-financing from the national budget.
- The amount of 732 million Euro proposed for the market measures, which comprise
the market intervention and the export refunding, does not require co-financing. This financial
support will be allocated starting with 2007. The market intervention is the instrument for
stabilization of the market prices by buying the production in surplus and stocking it in public or
private stocks, when prices for certain products (as for example cereals, dairy products, etc) are
under a certain level affecting the market and the incomes of farmers. The export refunds
represent the allocation for certain exported products (such as milk and dairy products, beef
meat, cereals, fruits and vegetables, sugar products, processed products, etc) of the difference
between the export price and the world price, taking into account that the prices for agricultural
products are, in general, higher in the European Union than on the world market.
The reference year for the fat production is 2004. The reference period for the volume
is 1 April 2005 - 31 March 2006.
The individual quota will be allocated in 2006. Farmers producing milk have
to apply for a milk quota according to Order 1388/2005. This order concerns the establishment
of the conditions for the approval of the cow purchasers and the application form for the
approval and registration in the Purchasers register.
Under supervision of the Romanian Ministry of Agriculture a Milk
Quota office is established at ANARZ (The National Agency for improvement of Reproduction
of Livestock). This Agency has 42 regional offices to supervise the milk quota system.
So support the development, establishment and management of
the milk quota system, technical assistance is provided by the PHARE Twinning programme.
This support will be provided by experts from The Netherlands, Austria and Poland.On June
28th, 2006, Decision no. 852-2006 was made on the approval of the Methodology for the
establishment of the individual milk quota allocation, as well as the allocation and re-
establishment of the national milk reserve.
Evaluation on request for milk quota system by
1st April 2007. By April 1st, 2007 a milk quota system was in place and since than allocations
have been made to those who applied for and are eligible for obtaining milk quota. However,
due to many circumstances, allocation of quota is still under discussion and will be subject to
changes. In short, on basis of the application made, the
following things were concluded at the beginning of the quota year:

Delivery quota
- National allocation 1,093,000 tons
- Of which reserve 21,860 tons
----------------------------------------
- Available for allocation 1,071,140 tons
- Request for allocation 1,022,607 tons
- 2% is made available 1,002,155 tons
250,493 holdings (farms) applied for quota for direct delivery to milk processing facilities.
These requests can be divided in the following quantities:

Volume in Kg %
< 5.000 40,4
5.001 – 10.000 16,4
10.001 – 50.000 17,8
50.001 – 100.000 19,9
> 100.001 5,8
In terms of farm size the request for delivery quota the breakdown is:

Number of
%
cows/applicant
<2 43,6
3 to 5 18,0
6 to 10 7,9s
11 to 50 16,4
51 to 100 3,8
> 101 10,3
- 68,985 tons is reserved for farm extensions and new investments

Direct Sales quota

- National allocation 1,964,000 tons
- Of which reserve 39,280 tons
----------------------------------------
- Available for allocation 1,924,720 tons
- Request for allocation 2,186,431 tons
- 622,504 holdings (farms/individuals) applied for quota for direct sales. These requests can
be divided in the following quantities;

Volume in Kg %
< 5.000 66,7
5.001 – 10.000 14,9
10.001 – 50.000 13,0
 50.001 – 1.000.000 5,1
> 1.000.001 0,4

Only four farms do have a quota more than 1 million kg.

Allocation of quota for extensions and new holdings
- Available for extensions and new holdings 68,985 tons
- Number of applications 1,233
- Quantity of milk requested 181,588 tons
- Estimation of the allocation % 38%

Current laws related to milk

 Order 445/4 July 2008, for the approval of the methodological norms regarding the
organization and functioning of the Informational System for the food and agricultural
products market and for the methodology of collection, processing, evaluation and
distribution of statistic data.
 Order 468/2006 concerning the approval of the form for milk quota request as well as
the procedure for giving the quota and registering in the Quota register
 Governmental Decision HG 924, 925, 954, 955/2002 is incorporating the EU
178/2002 laying down the general principle and requirements of food law, establishing the
European Food Safety Authority and laying down procedures in matters of food safety
 Government Ordinance 48/2005 organisation of the cow milk market, approved with
amendments and completions by the Law 72/2006.
 Order 1388/2005 establishment of the conditions for the approval of the cow
purchasers and the application form for the approval and registration in the Purchasers
register.
 Decision no. 852-2006 approval of the Methodology for the establishment of the
individual milk quota allocation, as well as the allocation and re-establishment of the
national milk reserve.
 Order 389/2002 is incorporating Council Directive 92/46/EEC. Order 1106/2003
(Ministry of Agriculture) to meet these criteria in three steps
 Government Decision 1853/12.2005 modified by HG 258/02.2006 is determinating
the subsidies for milk deliveries to processing plants.
 Government Decision 1557/2002 concerning the approval for the mechanism of
providing financial support for The Programme of Enhancing competitively of food
products, completed by Government Decision 2206/2004. Government Decision 108/2006
modifying Government Decision 1557/2002.
 Chapter III

Conclusions

Milk and dairy products are extremely important for the food sector. Milk is one of the
most important products of the Romanian agriculture, the sector has a major contribution to
the total value of agricultural production.
Our country accepted the acquis in the field and does not require the transition period.
Romania requires a period of 5 years to adopt safeguard measures on imports of
agricultural products or from one or more Member States, a transition period of 4 years, for
vineyard inventory and organizing a Community register of them, a transition period of 8
years, for the removal of a living culture of hybrid direct producers, a transition period of 3
years, in order to implement national policy for vaccination for classical swine fever, a
transitional period of 3 years, for modernization and technology units cutting and processing
meat, according to the requirements of the Community, a transition period of 3 years, to
modernize technology and processing units for milk and for the collection centers and the
standardization of milk, according to the requirements of the Community and a period of 3
years of transition, to comply with EU requirements on animal farms and milk quality of raw
milk obtained.
Therefore Romania requested and obtained a transitional period of 3 years, for
modernizing and re-vamping the milk processing units (28 units), as well as for the
organizing the milk collecting and standardization centers in compliance with the Community
requirements. Romania also requested and obtained a transitional period of 3 years, for
complying with the Community structural requirements regarding cow milk farms and the
quality of raw milk obtained.
Regarding the share of milk, Romania requirea a quota of 5 million tonnes for the
production of milk cow and buffaloes, except milk for calves and autoproducers, but was
granted a quota of 3 million tonnes of milk.
The financial support obtained within the negotiations for Chapter 7 – “Agriculture” is
of approximately 4,721 milliard Euro for the period 2007 – 2009.
The financial support proposed for the direct payments for Romania during the three
years is of 881 million Euro, which includes the financial support for the products or sectors
where quotas, reference areas or national ceilings are established.

Bibliography

* * * www.europa.eu

* * * www.fao.org

* * * www.insse.ro

* * * www.maap.ro