By Richard Wright

THE EU farm council at the end of this month is shaping up to be a showdown event. 
It takes place in Luxembourg, on June 27/28, and will be the last under the Dutch six-month EU presidency. It comes days after the UK vote on EU membership and that alone will make it interesting. 
The message from the Defra minister will either be a reminder that a narrow ‘yes’ vote underlines the need for radical change to the CAP, or the setting out of the path the UK will take to leave the CAP by the time it is reformed in 2020.
The Dutch presidency will end as it began, with debated dominated by the crisis in agricultural markets and in the dairy sector in particular. This has eased slightly, but it will be the end of the year before there is any realistic prospect of acceptable prices. 
We are now at the stage where things have stopped getting worse. The New Zealand Global Dairy Trade (GDT) auction has delivered some gains and this is being interpreted as evidence of global supply and demand moving back into balance. 
At the same time, the Rabobank has said the surge in production after quotas will tail off, helping to ease surplus production dragging down the market. This is positive, but farmers still face a big cash flow challenge to get through to 2017.
In place from the European Commission is the voluntary milk supply reduction scheme. Most people view this as a lame duck policy. 
Without funding it cannot work, and there are no signs of member states digging into their own funds to pay for the scheme at a national level. This has seen three key dairy players – Germany, France and Poland – coming together to call for a compulsory milk supply reduction programme, funded by the commission. 
To farm commissioner, Phil Hogan, this is a back-door attempt to re-introduce quotas. Even on a short-term basis, that is something he will not allow to happen on his watch. 
Another problem is that the countries pressing for this are falling into the trap of wanting to spend money that is not there. They want reduction to be funded by Brussels, but with the CAP coffers empty and any surplus in EU funds going to the migrant crisis, there is no spare funding to support a costly programme that would need to run for at least six months.
This is a difficult issue for the commission. It is never easy making policy decisions without the necessary funding, so funding is the issue ministers suggesting this need to tackle. 
Brussels could trigger the crisis reserve from the 2017 CAP budget, but this would have to be repaid by all farmers out of their single farm payments.
Many will feel they are in as deep trouble as dairy farmers but not getting the same publicity or political support for their cause. There is also the key question of whether a supply reduction would have a speedy impact on European prices, when the main problem is an out of balance global market. 
There is always a lag before any supply reduction kicks in, which is why it has never been an effective approach. It is worth remembering that quotas were introduced in 1984, not to improve milk prices, but to ease the cost of open-ended intervention.
This highlights the challenge of trying to control 28 different agricultural economies through CAP. Those demanding EU-wide solutions might do a bigger service if they acknowledged that the crisis underlines the need for a more flexible CAP where more decisions are taken at a national and even a regional level. 
This is one of the carrots being held out by the ‘Leave’ advocates in the EU referendum and it is going down well with farmers. 
This all means we are on course for a confrontational farm council at the end of the month. The battle will be between political demands to do something for dairy farmers, and an EU challenging those advocating this to explain how it would be funded – and why, if they are so keen on the idea, they are not funding it at a national level. 
A fudge is inevitable – but when the dust settles, another nail will have gone into the coffin of having a workable common agricultural policy for 28 very different EU member states.