Dairy UK said that maintaining some market support during the transition to removing quotas entirely by 2015 would help provide a more favourable environment for processors and their suppliers to restructure. The claims were released in a new a guidebook designed for dairy processors, farmers and other industry decision makers in light of ongoing Common Agricultural Policy (CAP) reforms in the EU.
Dairy UK's policy director Peter Dawson said that as health check discussions continued over the reforms, the focus must be on working to ensure that processors and farmers are free to innovate and expand. "It is vitally important that the transition to a quota-free market is planned and gradual, providing as much market stability as possible so farmers and milk buyers can adapt," he stated. "We want to see a genuinely soft landing."
To help ensure this softer landing, Dairy UK said that extending export refunds on butter may be required, along with market management mechanisms like intervention prices as a means of addressing volatile prices. Last year, the EC proposed a two per cent rise in milk quotas from April 2008 in a bid to drive down the price of the commodity.
EU Agriculture Commissioner Mariann Fischer Boel said that as the CAP reforms are designed to free farmers to produce for the market, the previous milk quotas were inconsistent with this aim. However, Dawson criticized the two per cent hike measures, claiming that UK farmers in particular would gain no new benefits from the measure.
"This country is already producing well below quota, and independent studies indicate that an increase will stimulate production in other parts of Europe, boosting supply and cutting EU dairy commodity prices," he stated. Dairy UK by contrast, said that it believed a gradual flat rate quota increase, applied equally across all member states should be used until quotas no longer proved valuable.
Despite calls for reconsidering the use of export refunds, Fischer Boel said in January that after being temporarily revoked in July for the first time since their inception 40 years earlier, their days were "surely numbered". "It's hard to see how they can contribute to the competitive, market-oriented agriculture that we want," Fischer Boel stated. "They draw criticism from around the world again and again, especially with regard to development issues."
The refunds were used to subsidise EU milk against competition from non-EU producing nations.