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12 MECHANISMS FOR INTERVENTION IN COMMODITY MARKETS

12.1 The Commission proposes to introduce a variety of changes to the various intervention systems used as market supply controls; these should be safety nets rather than slowing responses to market signals.

12.2 The Commission also proposes to abolish Private Storage Aids ( PSA) for cheese and certain disposal aid schemes for butter.

12.3 Respondents were asked "What are your views on proposals for simplifying and harmonising mechanisms for intervention in commodity markets?"; 23 replied with 12 of these simply giving brief responses in support of the proposals.

12.4 Four other respondents (an environment stakeholder, a local authority, an individual and a research/ education organisation) agreed that interventions should serve as a safety net only. One farming stakeholder and a farming organisation did not believe interventions are required in a marketplace which is moving towards greater trade liberation and where demand is outstripping supply.

12.5 A farming stakeholder commented that if interventions are removed then this should be accompanied by the removal of set-aside and the possibility of levying export taxes.

12.6 Eight respondents were broadly supportive of having or maintaining intervention options. These respondents brought up a variety of areas and circumstances in which the inability to operate an intervention system was perceived to be detrimental, and examples of areas in which they worked well.

12.7 One area highlighted was intervention for bread wheat:

• intervention system is perceived to be working for wheat and barley (farming);
• "if intervention were only available to high quality bread wheat then Scotland would lose access to an important market safety net" (farming stakeholder);
• give further consideration to retaining intervention for bread wheat but managed with greater scrutiny to prevent impact on prices or a wheat mountain (local authority and farming).

12.8 Comments from a farming stakeholder included:

• cereal production, as a vital part of the food supply chain, should have intervention as a safety option;
• "Intervention is important for the cereal market in order to provide a safety net";
• extending the 'maize' model to other feed grains would discriminate against Scottish farmers if it meant feed grain were to be excluded from the intervention.

12.9 There were a variety of comments relating to butter and butterfat from a supply chain/ livestock stakeholder:

• PSAs for butter should be made automatically available;
• retain butter intervention and PSAs after end of quota scheme to reduce price volatility;
• the Butterfat Subsidy Scheme should be retained until end of quotas;
• the value of butterfat is a particular problem so export refunds for butter need to be retained and used for as long as possible.

12.10 Other comments included:

• the EU will require export refunds to manage its relationship with the world market, while quotas remain, to help achieve a smooth landing (supply chain/ livestock);
• tendering would bring uncertainty into the operation of an intervention safety net (farming);
• Scottish livestock can face sudden downturns in market prices that result from market and trade restrictions imposed as consequence of disease outbreaks (supply chain/ livestock);
• "The ceiling of 30,000 tonnes should be increased to ensure the intervention safety net is available for a meaningful period of time. This would prevent market operators working under the assumption that prices will fall below the intervention price as a result of tendering. The accumulation of stock would also allow the Commission to address food aid emergencies and to minimise speculative upsurges in price impacting on the wider market situation." (supply chain/ livestock);
• food should be stored for times of shortage and to ensure global food security (wider interest).

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