EU milk quota abolition the 'closing of a chapter in the history' of dairy: EC


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EU milk quota abolition the 'closing of a chapter in the history' of dairy: EC

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Today - the final day of the European Union (EU) milk quota system - has been branded the "closing of a chapter in the history" of the global dairy sector.

EU milk quotas, introduced in 1984 as a temporary measure to address the issue of over production, end today - the final day of the 2014/15 season.

Work to dismantle the system began in 2003, when EU Member States and the EC decided to only extend EU milk quotas to 2015.

Since then, measures, including a gradual increase in national quotas, have been implemented to ensure a "soft landing."

In a statement, Phil Hogan, EC Commissioner for Agriculture and Rural Development, welcomed the start of a "new era."

"The end of the era of milk quotas represents the closing of a chapter in the history of the European - and indeed global - dairy sector,"​ said Hogan.

"It represents the opening of a new chapter - a new era without production constraints,"​ he said.

He said last week that the milk quota abolition represents "both a challenge and an opportunity"​ for EU Member States.

Enhance competitiveness 

Alexander Anton, secretary general, European Dairy Association (EDA) said the abolition will "naturally further enhance the competitiveness of the whole sector."

"For decades dairy companies have been in charge of managing the milk quota system at their level, including the levying of the superlevy payment," ​he said.

"It goes without saying that the end of the quota will lower the administrative burden at all levels."

Under the system, EU Member State were issued with two national quotas - one for milk deliveries to processors and the other for direct sales at farm level.

Member States that exceeded either quota were issued with a fine, called a superlevy, of €27.83 per 100kg.

In October 2014, farmers in Germany, the Netherlands, Poland, Denmark, Austria, Ireland, Iceland, Cyprus, and Luxembourg were order to pay a total of €409m in fines for exceeding their 2013/14 quotas.

Milk production across the 28 EU Member States is expected to increase just 1% in 2015, but rocket in the long-term. 

By 2020 the US Dairy Export Council (USDEC) expects EU Member States to produce 15.4m tonnes (11%) more milk than in 2013. 

In its report, 5 Data-Based Forecasts about the end of EU Milk Quotas,​ USDEC said more than 75% will come from just six Member States - Ireland, Denmark, France, Poland, Germany and the Netherlands.

Additional cheese, whole milk powder (WMP), skim milk powder (SMP) - the "vast majority"​ from these six Member States - will leave the EU, the USDEC report added.

"The research is clear that more dairy commodities from the EU will lead to increased competition between the major exporting countries, including the United States, New Zealand and EU member nations,"​ it said.

Related topics Regulation & Safety Fresh Milk

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Some good some evil..

Posted by Kim Yeomans,

I first hark back to the days of the MMB, controlling the price of milk for all producers in England and Wales. To the producer manufacturers a different price for each market sector. A monopoly maybe, but all was well in the world, the seasonal peaks and troughs were managed. Then with the abolition came chaos until quotas, necessary to regulate production and stabilise supply and demand to some extent. Now we release back to open market post MMB, tell me what changed? Yes there has been some innovation in fractionating milk and whey to constituent parts, but have we really created (or can we) new markets for the extra milk that will come? Yes the East is open (for now) with demand for Infant foods and expanding dairy, when they catch up with production, they will not import from the west for ever, what then? I predict market forces will prevail and supply and demand laws will ultimately push down prices for the raw material to the farmer and cost of goods in the market place.
Sounds gloomy and negative but in opinion realistic.
So 'some good' the consumer will have cheaper produce and more choice, The retailer will have more choice to play off manufacturer suppliers. Some evil, the poor farmer and the product manufacturer will be squeezed even harder, cost will be driven down, margins tightened, some will fall, some will win.
These comments are my personal opinion and do not reflect the views of my employer in any way.

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Processors delight

Posted by Carroll Wade,

The income level of the EU dairy farmers will drop as the processors delight in the ability to pit producers from around the world against one another and depress the prices below profitable levels . The entire economy of the EU will suffer because the farm community will not be able to afford the goods and services of the rest of the labor and manufacturing sectors . The multi-national processors will reap the greater harvest from the backs of the producers . The EU is foolish to allow themselves to be bullied by producer and processor interest from off shore . This is a huge mistake for the well being of farmers and all of society .

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