September 3, 2009

Milk quotas in the EU will be cut in 2015 and not in 2010 to shore up the depressed dairy market, according to EU farm commissioner Mariann Fischer Boel.

Addressing the European parliament agriculture committee for the first time since the summer recess, Fischer Boel said she was sticking to her guns over the quota issue, stating prolonging the "heavy-handed central planning" of the milk quota system would hold back efficiency, raise production costs and make it harder for young farmers to enter the sector.

As well as dismissing calls for tighter quotas, Fischer Boel also rejected a European parliament proposal for a "dairy fund" to support restructuring, questioning where the money would come from. The draft budget for 2010 leaves only a very limited margin, she says, adding that for the following years, "the risk of financial discipline is becoming real, so here also we can't bank on having money available."

Despite this, the commission was being proactive in using traditional market measures to support the market, she insisted. According to Fischer Boel, a total spending of 400 million euros (US$570.96 million) is estimated for the budget year 2009 and 600 million euros (US$856.54 million) for 2010 "is rather more than pocket money - and it's taking effect". The market is coming back into balance and dairy prices have stabilised, she said.

Speaking to journalists after the meeting, agriculture committee chairman Paulo de Castro said he welcomed the "timid" signs of recovery now emerging in the global dairy markets, but he did not believe the EU Commission's actions went far enough. There was no structural surplus of milk, he suggested. The crisis was more down to falling demand. He therefore called on the EU Commission to do more to stimulate the market - especially for cheese.

Fischer Boel suggested some of the blame lay with the supermarkets, explaining that, while producer prices for dairy products had plunged below where they were before the price spike of 2007, consumer prices were still 14 percent higher.

US$1 = EUR0.70 (Sept 3)