The milk and milk products sector is experiencing a prolonged period of severe market imbalance. Farm gate milk prices have been under pressure for the last 18 months, due to imbalance between increased production and decelerating demand growth on the world market. Milk deliveries in the Union increased by more than 3,5 million tonnes in 2015, while import demand on the world market did not increase. This built on an even larger increase in milk deliveries in 2014, while the long-term trend in import demand is estimated to involve the equivalent of 1,5 million tonnes of milk more on average per year. Margins at farm level are squeezed between dropping milk revenues and increasing costs, notably linked to debt servicing. The long-term nature of investments in dairy herds makes it particularly difficult for farmers to quickly shift to alternative businesses under adverse circumstances.

Skimmed milk powder has been bought in under public intervention since July 2015.

Aid for the private storage of butter, skimmed milk powder and cheese has been granted since the introduction of the Russian import ban in August 2014.

Despite the effectiveness of those measures, the situation continues to deteriorate due to the fact that the closure of the Russian market and lower demand from China have hit the milk and milk products sector at a time where investments in production had been made in view of the milk quota expiry on 31 March 2015 and positive prospects on the world market. On the basis of the available market analysis, any significant decrease in production volumes is not to be expected in the next two years.

In order to help the milk and milk products sector find a new balance under the prevailing severe market situation and accompany the necessary adjustments following milk quota expiry, it is appropriate to allow for voluntary agreements and decisions of recognised producer organisations, their associations and recognised interbranch organisations to plan production on a temporary basis for a period of six months.

Such agreements and decisions on planning of production should be temporarily authorised during six months, coinciding with spring and summer, which is the high production season in the milk and milk products sector and should therefore have the most significant impact.

In accordance with the first subparagraph of Article 222(1) of Regulation (EU) No 1308/2013, an authorisation is to be given on the condition that it does not impair the functioning of the internal market and that the agreements and decisions strictly aim at stabilising the milk and milk products sector. That specific condition excludes agreements and decisions that directly or indirectly lead to partitioning markets, to discrimination based on nationality or to fixing prices.

The authorisation provided for in this Regulation should cover the Union territory given that the severe market imbalance is common to the whole Union.

In order for the Member States to be in a position to assess whether the agreements and decisions do not undermine the functioning of the internal market and strictly aim to stabilise the milk and milk products sector, information should be provided to the competent authorities on the agreements concluded and decisions taken and on the production volume covered by them.

Given the severe market imbalance and the run-up to the seasonal peak, this Regulation should enter into force on the day following that of its publication.

The measures provided for in this Regulation are in accordance with the opinion of the Committee for the Common Organisation of the Agricultural Markets,