1. The future of the European milk sector: what instruments are needed to prevent future crisis Mr. Tibor Mélykuti President of the Hungarian Milk Interbranch Organisation and Dairy Board Managing Director of the Alföld Milk Ltd., Hungary

2. Milk Interbranch Organisation and Dairy Board Representative interbranch organisation milk production → 72% collected milk → 85% retailers → 63% Recognised interbranch organisation

3. Hungarian dairy sector: Raw milk production: ≈ 1.800 thousand ton Delivery of raw milk to processors: ≈ 1.500 thousand ton Milk prices paid to the producers : December 2015: 24.95 euro/100 kg Average of January→December 2015: 25.92 euro/100 kg

4. DateHUEUHungary’s ranking (EU-28) August 200529,7829,12 7. (EU-24) April 200726,9827,58 17. (EU-25) January 200836,87*38,5420. June 200919,80**24,5323. January 201435,7340,0825. August 201524,0329,7225. November 201525,2130,7725. Source: MMO *The highest average raw milk price (period 2004-2015) **The lowest average raw milk price (period 2004-2015) Raw milk prices in Hungary and in the EU (EUR/100kg)

5. Dairy market situation in Hungary: raw milk prices decreased by 25% in 2015, the lowest milk prices in the region, unchanging/shrinking/ commodity prices. Main factors affect the situation: milk quota abolition, Russian import ban, higher milk supply driven by a general overproduction, VAT fraud driven by high VAT of dairy products in Hungary, overall condition of Hungarian dairy industry.

6. European solutions – 1. compensation for the abolition of the quota (property right with value), compensation for an unused quota, compensation for farmers - who stops milk production (in case they continue other agricultural activity), financial support for PO’s (e.g. positive discrimination for PO’s in CAP aids and measures), further exemptions of IBO’s (in crisis situation) from competition law.

7. European solutions – 2. learn the lesson of sugar sector, keep away from abolishing the whole milk production in some countries, ending the Russian import ban, tightening up the control of traders, purchase and distribution of milk powder within member states, promotional programs for ‚poorer’ IBO’s, ban ‚dumping’ within the EU, raise intervention prices.

8. Thank you for your attention! Contact: Tej Szakmaközi Szervezet és Terméktanács 1115 Hungary, Budapest, Bartók Béla út 152/c Telephon : (+36-1) 203-1450 E-mail: tejtermek@tejtermek.hu.tejtermek@tejtermek.hu