The EU butter mountain looks set to grow larger after the European Commission proposed extending its intervention period.

The EU intervened in the European dairy market in March, buying up butter and skimmed milk powder to help stabilise falling commodity prices.

It had been expected to end the period of intervention in August but global milk prices have continued to fall as the recession brings a drop in demand for dairy around the world.

And the EC yesterday proposed allowing intervention until February 2010, with a view to extending it even further until February 2011 if the situation demands it.

The EC has already bought up 81,000 tonnes of butter and 203,000 tonnes of SMP – far in excess of the normal intervention limits of 30,000 tonnes of butter and 109,000 tonnes of SMP.