SURVEY OF GOVERNMENT MEASURES TO EXPAND DOMESTIC CONSUMPTION OF DAIRY PRODUCTS. Addendum SWITZERLAND

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1 GENERAL AGREEMENT ON TARIFFS AND TRADE RESTRICTED DPC/P/W/11/Add.7 IZZZZ^t 28 June 1983 Special Distribution International Dairy Arrangement Original: French Committee of the Protocol Regarding Certain Milk Powders Committee of the Protocol Regarding Milk Fat Committee of the Protocol Regarding Certain Cheeses SURVEY OF GOVERNMENT MEASURES TO EXPAND DOMESTIC CONSUMPTION OF DAIRY PRODUCTS ' Addendum SWITZERLAND (A) INFORMATION ON GOVERNMENT PROGRAMMES TO EXPAND CONSUMPTION: I. Welfare and social programmes At national level, itzerland has not introduced any welfare and social programmes. On the other hand, certain municipalities grant modest subsidies to encourage milk consumption in schools. II. Direct consumer subsidies for butter 1 Document L/5102/Add.9 reports in pages 4 to 6 the amount of subsidies paid to encourage butter disposal. Government expenditure per kg. is currently at the following level, according to the type of butter: Cooking butter, F/kg.: 5.44 to 8.42 Resolidified butter, F/kg. of fresh butter: 9.03 to III. Direct subsidies for use of skimmed milk powder and liquid skimmed mi Ik for animal feed (a) Liquid skimmed milk In order to ease the market for milk products, price reductions are granted on fresh skimmed milk used on the farm for swine feed. These reductions are currently at the rate of F 0.09/kg. 1 See in Annex extracts from this document (Annex I: pages 3 to 8 of document L/5102/Add.9 - Subsidies - Notifications pursuant to Article XVI:1)

2 Page 2 (b) Skimmed milk powder No subsidies are paid to encourage consumption of skimmed milk powder. In accordance with a composition standard in force, however, milk substitutes must contain at least 60 per cent of skimmed milk powder and 18 per cent of whole milk powder. IV. Sales and/or donations of government support stocks itzerland has no government stocks system in respect of dairy products. V. Direct subsidies to consumers for products other than butter and skimmed milk powder including cheese and milk for human consumption (a) Cheese 1 Document L/5102/Add.9, pages 7 and 8, describes the subsidy paid by the iss Government to encourage cheese disposal. The price reduction under this programme varies between F 0 and 270/quintal, according to the cheese variety. In addition, a subsidy at the rate of F 250/quintal is paid on the raw material delivered to cheese industries. (b) Skimmed milk powder A subsidy at the rate of F 1.71/kg. is granted to the chocolate industry in respect of three quarters of the quantity of whole milk powder purchased in the country. (c) Cream The Government is to contribute, at the rate of 80 centimes per litre, to the price reduction on whole cream in the context of the three two-week sales campaigns that are being organized in This contribution will be granted on condition that fresh cream producers pay an additional contribution at the rate of 20 centimes per litre. (B) BROAD ESTIMATE (1) Proportion of consumption supported Domestic butter: Domestic cheese: Liquid milk: 100 per cent 100 per cent 5 per cent Skimmed milk powder: no consumer subsidies are granted on skimmed milk powder See in Annex extracts from this document (Annex I).

3 DPC/F/W/lO/Add.7 Page 3 (2) Total expenditure Expenditure for valorization of milk and dairy products has been^ reported on a number of occasions, most recently on 17 February 1983 in document DPC/INV/2/Add.1. 1 See Annex II

4 DPC/FVW/11/Add.7 Page 4 COMPARATIVE GENERAL OVERVIEW 1 I. Butter Year Unit Total production nut 36,000 34,300 34,700 30,800 Total consumption 46,000 49,100 45,800 45,400 isumption : measures 80 approx 70 approx 75 approx 68 approx Total exports Total imports 8,000 13,200 12,300 15,300 End-of-year stocks m. t. 4,000 2,400 3,600 4,300 Government expenditure for valorization of butter 228, , ,842 Compiled by the secretariat on the basis of information furnished in reply to product questionnaires.

5 Page 5. Cheese Year Unit Total production 121, , , ,900* Total consumption 80,000 81,400 85, ,200 Proportion of total consumption supported by government measures 75 approx 75 approx 75 approx 75 approx Total exports 59,000 62,800 64,800 61,300 Total imports m.to 19,000 20,000 20,300 20,700 End-of-year stocks 24,000 18,500 15,300 17,100 Government expenditure for valorization of cheese 334, , ,673 Provisional figure

6 Page 6 APPENDIX INDIRECT GOVERNMENT PROGRAMMES FOR EXPANDING CONSUMPTION OF PRINCIPAL DAIRY PRODUCTS I. Government-imposed producer levies The deductions applied on the price paid to milk producers are described in document DPC/INV72/Add.1 (page 5). 1 II. Promotion of consumption (advertising) During the /81 milk year, the government paid out the following amounts in this respect: Cheese: Tilsit F 800,000 Soft cheese 1,000,000 Emmenthal, Sbrinz, Gruyère 6,600,000 Total 8,400,000 Butter: 5,800,000 These expenditures have been indicated in the dairy account. See Annex II

7 0PC/C/W/10/Add.7 Page 7 Annex I: Pages 3 to 8 of document L/5102/Add.9 PART ONE: AGRICULTURE I. Milk and dairy products (a) Dairy account of the Confederation Dairying is the most important branch of iss agriculture; it brings in more than one third of the gross value of agricultural production. The dairy account of the Confederation shown below gives a general picture of the financial measures taken in this sector. The details of these measures will be studied in the succeeding chapters dealing with the various groups of dairy products. Accounting period ( F f 000) (1 November-31 October) 1977/ /79 /80 Expenditure Total 565, , ,072 including mainly: - valorization of butter 180, , ,874 - valorization of cheese 309, , ,782 - principal other measures (including valorization of preserved milk products) 23,668 20,925 20,693 - contributions to producers delivering neither milk nor dairy products 28,799 40,397 40,999 Coverage Total resources inc luding: Payments by the Confederation out of which: 565, , , , , ,674 - general funds 322,752 - revenue from charges and price supplements 201, , , , ,846 Share of losses payable by producers 41,176 52,555 56,398

8 0PC/P/W/11/Add.7 DPC/C/W710/Add.7 Page 8 (b) Butter 1. Nature and extent of the subsidy (i) Legal basis and legislative provisions - Agriculture Act of 3 October 1951; - Order of the Federal Assembly of 29 September 1953 concerning milk, dairy products and edible fats; - Federal Act of 21 December 1960 concerning goods at protected prices; - Dairy Economy Order of 7 October The iss butter market is governed by the iss Central Office for Butter Supplies (BUTYRA), a public co-operative society which holds the monopoly of butter imports. It levies a charge on imported butter, purchases at a price corresponding to the base price of milk any domestic butter which cannot be readily sold and arranges for its disposal with the help of contributions granted by the Confederation. ( i i) Incidence The following subsidies, which may be granted concurrently, promote the sale of butter on the domestic market only: 1. (a) BUTYRA pays a subsidy to the butter centres to enable them to sell table butter without loss at prices fixed by the Federal CounciI. (b) The Confederation allocates to BUTYRA the sums necessary to enable it to sell fresh or resolidified cooking butter at a reduced price. The amount of the price reduction, and consequently of the loss entailed, varies according to the destination and quality of the product. 2. BUTYRA shares in the cost of advertising to promote butter consumption. 3. In order to stimulate the use of fresh skimmed milk for animal feed, BUTYRA pays a subsidy to users of this product.

9 DPC/C/U710/Add.7 Page 9 (iii) Amount of subsidy Accounting period (Su ) (1 November-31 October) 1977/ /79 /80 1(a) Kb) 2 3 Reduction in price of table butter Reduction in price of cooking butter and resolidified butter Butter advertising Subsidy for fresh skimmed milk intended for animal feed 98,094 65,679 3,918 12, ,787 84,573 5,707 13, ,097 78,890 5,668 15,727 Total expenditure on valorization of butter 180, , ,382 (iv) Amount per unit 1. (a) Subsidies for table butter varied, according to quality, as follows: From From From or 3.78 frs per kg or 4.02 frs per kg or 4.24 frs per kg. 1. (b) Subsidies for cooking butter and resolidified butter varied, according to the quality of the butter used as follous: From : From : From 1.7.: Cooking butter Su F per kg to to to 8.32 Resolidified butter Su F per kg. of fresh butter 8.52 to to to Effect of subsidy - prices and consumption (i) The follouing tables shou the trend of prices and of butter consumption from 1977/79 onuards: - Retail prices (Su F per kg.) Before From From Special butter (packages of 200 grs.) Fresh cooking butter (packages of grs.) Resolidified butter (tins of 450 grs.)

10 Page 10 - Annual consumption Variation in In tons 1978/79 to /80 to 1977/ /79 / / /79 Total consumption of butter 45,544 46,225 47, including: Special butter Fresh cooking butter Resolidified butter (in terms of fresh butter) Consumption per capita (kgs. per annum) ~~ 12,491 25,930 3, ,859 26,141 3, ,461 27,078 3, It should also be noted that, in order to limit as far as possible the losses incurred in the valorization of milk, an order of priority is laid down. The largest possible proportion of domestic production is to be used to meet the demand for fresh milk and fresh dairy products, which can be sold without loss. Apart from that, the manufacture of cheese and preserved milk products takes priority over butter, which involves the heaviest losses in the utilization of milk; efforts are being made to encourage imports of butter. (ii) 1 / Total production, imports and consumption of butter (in tons)- Calendar year Production Imports Consumption ,953 14,950 45,678 35,954 18,273 46,439 34,257 13,213 49,499 (c) Cheese 1. Nature and extent of the subsidy (i) Legal basis and legislative provisions The legal basis is the same as for butter. Pursuant to these legislative provisions, the organizations of milk producers and of manufacturers and exporters of cheese established the Union Suisse du Commerce de Fromage S.A. (USF), which purchases the domestic output 1/_...,. Exports are insignificant. Allowing for fluctuations in stocks

11 Page 11 of hard cheese (Emmental, Gruyère and Sbrinz, representing 80 per cent of total output) at fixed prices and resells it through private firms at the best prices obtainable. However, in these operations, USF incurs losses which are charged to the dairy account of the Confederation (see page 3). (ii) Incidence As the dairy account shows, most of the deficit resulting from USF operations is met by the Confederation; the remainder is borne by the producers. Certain valorization expenses are also met out of the dairy account in the case of other types of cheese which are not subject to compulsory delivery to USF. As to the incidence of the measures adopted in this connexion it should be pointed out that, because of their quality, iss cheeses sell at higher prices than similar cheeses from other countries, whether on the home market or on export markets. (iii) Amount of subsidy (Cf. dairy account, page 3.) (iv) Amount per unit It is not possible to calculate the price reduction resulting from the intervention of the Confederation to cover losses on the valorization of cheese, because the prices obtained vary from market to market. 2. Effect of subsidy (i) The fact that the Confederation covers part of any deficits in the dairy account (the remainder being borne by the milk producers - see page 3) offsets the difference between, on the one hand, earnings from cheese sales on domestic and foreign markets!/ and, on the other, the production costs of the same cheese, established according to the base price of milk. (ii) Production, imports, exports and consumption- Year Production Imports Exports Consumption- - t t t t ,800 19,677 56,549 80, ,000 19,158 58,738 81, ,900 20,046 62,797 86,670 provisional Tl - Under its statutes, USF is under a duty to dispose of cheese at the highest possible prices. 2/ - Including the output from mountain pasture cheesemaking and Schabziger (estimates). - Allowing for fluctuations in stocks

12 Page 12 (d; Preserved milk products 1. Nature and extent of the subsidy (i) Legal basis and Legislative provisions The legal basis is the same as for butter and cheese. (ii) Incidence The subsidy is designed to safeguard traditional exports of preserved milk products. It is paid on the basis of the quantity of milk used for the manufacture of these products. (iii) Amount of subsidy (Cf. dairy account, page 3). (iv) Amount per unit From 1 May 1977 to 31 October 1978 the subsidy was 48 centimes per kilogramme of milk used for the manufacture of these products; from 1 November 1978 to 30 June it was 55 centimes, and from 1 July onwards 58 centimes. Since the amount of milk used for the manufacture of one kilogramme of preserved product varies according to the product, it is impossible to determine the amount of the subsidy per unit of preserved milk products. 2. Effect of subsidy (i) Since foreign selling prices do not cover the production cost of milk, these subsidies are necessary in order to maintain traditional exports. (ii) Production, imports, exports and consumption (in tons of fresh milk used) Year Production Imports Exports Consumption , , ,800 t t t t Commercial Assistance Schemes 26,000 27,600 14, ,000 25,700 19,000 18, ,700 26,100 24,900 18, ,300

13 Page 13 Annex II: Pages 4 and 5 of document DPC/INV/2/Add.1 (c) Amount of producer subsidies - The 10 per cent general reduction in subsidies decided by Parliament for the years to 1983 has affected payments by the Confederation to the dairy balance sheet, which is as follows for the / dairy accounting period (1 November-31 October): $ 'oool 7 Total expenditure 661, ,309 including mainly: - valorization of butter 216, ,634 - valorization of cheese 348, ,894 - contribution to producers delivering neither milk nor dairy products 47,230 24,097 - other measures 48,381 24,684 Total resources 661, ,309 including Payments by Confederation out of: - general funds 409, ,096 - revenue from charges and price supplements 204, ,589 i Share of losses payable by producers 46,304 23,624 J/$1 = F 1.96 Contributions to the costs of cattle-owners in mountain regions are exempt from the general reduction in subsidies. The unit rates of those contributions have not been changed. In the year, the total amount paid in this respect was F 122 million ($62 million).

14 0PC/P/W/11/Add.7 Page 14 (d) Average returns to producers In order to determine the price actually paid to the producer, various supplements to and deductions from the base price must he taken into consideration. (See section (b) above) As regards deductions, and as already reported above, producers participate collectively, through the deduction from the base price for milk, in losses resulting from the valorization of dairy products. With the introduction of the individual quota system for milk deliveries, this deduction has been lowered from Fr 0.0^5 to Fr 0.02/kg.of milk. It should be noted that in order to assist small producers, a quantity of 8,000 kgs. (20,000 kgs. in the mountain regions) is exempt from the deduction. In addition, a tax of Fr /kg.is applied on all commercial milk deliveries by each producer. This is intended for the financing of special measures to promote sales of milk and dairy products, such as publicity, market research or promotion of nev products. The base price less the deduction and tax does not correspond exactly to the real return to producers which is also affected by the following elements: - In general, producers are members of co-operatives for the marketing of milk and dairy products, and profits accrue to them from retail sales. The additional amount thus received, varying according to the locality, amounts on average to Fr to Fr 0.02 (0.3 cents to 1.2 cents)per kg/litre for the country as a whole. - For each kg of milk processed into cheese, a supplement of Fr 0.02 is accorded throughout the year. During the winter, i.e. from 1.11 to 30.k, an additional allowance of Fr 0.09/kg. is paid on milk coming from ensilage prohibition zones. - In addition, price deductions are made in respect of insufficient quality when the milk is paid for. They vary according to the quality defect of the milk and may be as high as Fr 0.09/kg of milk. In particularly serious cases, a decision may be made to prohibit deliveries. - The price indicated corresponds to the ex-dairy price. To obtain the value corresponding to the ex-farm price, one must further deduct transport costs which amount on average to Fr 0.03 (2 cents) per litre of milk.