Czechs to be fined over EU milk quota

By Leah Vyse

- Last updated on GMT

Related tags: European union

The Czech Republic's dairy industry is facing a €7m (CK 200m) fine
as milk output is forecast to exceed the national quota for 2005/6
of 2.682 billion kilos.

The output for this season, ending 31 March, is estimated to exceed the quota, which was established when the country joined the EU in 2004, by 22m kg, according to the Czech Agrarian Chamber.

The fine is expected to be in the region of €0.33 per kilo but farmers will only be required to pay €0.09 per kilo because some farmers will fall short of their quotas.

Overproduction has been attributed as the cause of the problem, with industry insiders speculating that output was over quota by between 7 and 15m kg.

Greater efficiencies and improved breeding practices by farmers are thought to be at the centre of the problem, which will inevitably worsen in the future leading to speculation that the national quota should be increased.

By October 2005 the European Commission had issued €364m in fines after nine member states exceeded their milk quotas for the year up to 31 March last year.

The states - Belgium, Denmark, Germany, Ireland, Italy, Luxembourg, the Netherlands, Spain and Austria - accounted for a combined overrun of one million tonnes.

The EU Council of Ministers has agreed to keep the 20-year-old milk quota system until 2015, after the current CAP reforms are due to finish.

Poland's dairy industry has also been suffering the impact of EU milk quotas. A recent report from the US-based Babcock Institute at the University of Wisconsin claimed it would be the "driving force" in shaping the industry.

It warns that Poland's restrictive milk quota threatens to transform the country from a net exporter of dairy to a net importer within five to seven years.

Figures show the change here would be drastic - export value was predicted at almost €650m in 2005, with imports at around €100m. Almost half of exports go to the old EU-15 nations.

"Poland's dairy industry is better equipped to export than it was before EU accession. However, the binding EU production quotas will prevent the industry from capitalising on this improved position,"​ says the report.

Most of the change will come as Poland cuts down production of skimmed milk powder, its biggest export product, and pumps milk into higher value goods such as cheese, yoghurt and fluid products.

Related topics: Manufacturers, Fresh Milk

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