European Commission (EC)-issued milk quota penalties could impact the production of milk and leave dairy processors short, according to the European Dairy Association (EDA).
Speaking with DairyReporter.com, EDA general secretary Dr. Joop Kleibeuker said that dairy farmers could be deterred from producing the levels of milk needed by processors to meet demand.
Last week, the EC issued ‘superlevy’ penalties totaling more than €78m to six European Union (EU) Member States for exceeding their 2011/12 milk quotas collectively by 283,000 tonnes.
Austria was worst hit by the ‘superlevy’ penalties. Dairy farmers in the country were handed fines totaling €33.6m for over-shooting their quota by 4.2%. The Netherlands, Ireland, Germany, Cyprus and Luxembourg were also punished.
“To an extent it does impact processors in a sense that farmers will reconsider how much milk they produce to stay within their quotas, which could result in a lower supply of milk to processors. This could ultimately impact their ability to meet demand,” said Kleibeuker.
Dairy sector benefit
The EU milk quotas were established in the 1980s to address the problem of over-production of milk in the region. They are due to be abolished in April 2015.
In the meantime, milk quotas for the EU’s 26 Member States will increase by 1% per year.
Pressed on whether the dairy sector would benefit from a more substantial yearly increase Kleibeuker said: “In the end, we expect that the whole dairy sector will benefit from the milk quota abolition in 2015, which makes you wonder if it would have been better for the industry if the yearly increases had been more flexible.”
He added that there have been requests from a number of EU politicians to make the increases more flexible.
“Some would be pleased by a larger yearly increase, but others prefer an element of control. There is no single position on this issue. It differs from region to region. But there could have been more flexibility.”
“But that is not the case. The industry agreed on the 1% increase each year and on no increases in 2013 and 2014. And at the moment, we are not applying any pressure to change this.”
Kleibeuker added, however, that while the 1% increase may have hampered further industry growth, it has given processors in the EU ample time to prepare.
“It has given processors time to plan and expand their processing capabilities,” Kleibeuker added.
“We can see processors preparing for 2015 and beyond through investment in facilities and through the development of new markets.”