Industry backs sale of EU intervention milk powder

By Jane Byrne

- Last updated on GMT

Related tags Milk European union European commission Eu

The confectionery division of the UK Food and Drink Federation (FDF) has backed the move by the European Commission to open tenders for the sale of intervention skimmed milk powder (SMP) as a way of bolstering raw material supply for the sector.

Martin Turton, executive secretary of the Biscuits, Cakes, Chocolate and Confectionary Sector Group at the FDF told that the decision taken at last week’s EU Dairy Management Committee to sell intervention stocks of the commodity until 1 June 2010 will reduce SMP prices.

The EU has agreed to release up to 25,000 tonnes of butter and some 65,000 tonnes of skimmed milk powder (SMP) from intervention stocks, on the back of rising dairy prices.

Skimmed milk powder is a significant ingredient in European confectionery manufacture, with companies buying up some 35 per cent of the bloc's SMP production for use in their products.

Demand for dairy produce has surged over the past two months, driving prices for butter and SMP in the EU up by as much as 25 per cent, with the market price for SMP moving from €1,900 per tonne to €2,300-2,400 per tonne in that period.

Since the end of 2009, the confectionery industry has been consistently asking the Commission that intervention stocks be released to help reduce price pressures.

The EU dairy management committee meeting saw a non-opinion issued by member state experts, according to media reports. However, in the absence of a qualified majority either way, the Commission is able to approve the proposal and open up the stocks for release onto the market.

The Commission will announce successful bids on 3 June.

According to Turton, the stock releasing move will enable confectionery and other food manufacturers to operate on a more competitive and flexible basis.

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