March 18, 2008

EU approves 2 percent milk quota rise
 

EU Agriculture Ministers approved the 2 percent increase in milk production quotas effective April 1 this year.

The production increase of 2.84 million tonnes is aimed to meet growing EU and global demand for milk. It will be split equally among the 27 member states.

A report published by the European Commission last December showed an additional 5.5 million tonnes of milk were needed between 2003 and 2007 to meet demand among cheese and milk processors.

It was also indicated in the report that an additional 8 million tonnes of milk will be needed to meet internal demand through 2014. According to the Food & Agricultural Policy Research Institute's Agricultural Outlook 2007, should EU quotas remain unchanged, EU dairy exports will loose its share on world markets due to the expected increase in domestic dairy consumption.

The information in the commission's report justifies the 2 percent increase, said EU Agriculture Commissioner Mariann Fishcer Boel.

Ireland's Agriculture, Fisheries and Food Minister Mary Coughlan expressed optimism, saying that the increase in the quotas is very useful for Ireland. It is an opportunity for Irish producers to meet the market's demand effectively, Coughlan added.

Dairy producers in Scotland do not expect to benefit from the quota increase. According to a spokesperson for NFU Scotland, the country's leading agricultural organization, there would be little change in production unless farmers are paid more for their milk.

Germany opposed the quota increase, arguing that a growth in production would cause a decline in prices. It is counterproductive, said German Agriculture Minister Horst Seehofer.

The EU's milk quota scheme was implemented in 1984 to limit supply and increase competitiveness. According to Boel, however, the quotas have lost its relevance.

The EU plans to abolish the milk quotas entirely by 2015.