December 18, 2007

 

EU proposes 2 percent increase in milk quota 

 

 

The European Commission has proposed to increase milk quotas by 2 percent starting April 1, 2008 in a move to increase fluid milk production by an additional 2.84 million tonnes of milk.

 

The commission explained that its analysis proved that the increased supply will be needed to meet domestic and global demand, particularly from emerging markets.

 

Agriculture Commissioner Mariann Fischer Boel in a statement released in Brussels, Belgium said the quota aims to "free farmers to produce for the market, and restrictive milk quotas are inconsistent with that aim. We have seen a sharp rise in milk prices over the past year and a growing call for higher quotas."

 

The quota increase still needs to be approved before April by the European Union's 27 farm ministers and the European Parliament in Luxembourg.

 

If approved, the quota will be distributed on an equal basis, with each of the bloc's 27 member states receiving a share. Once the quota is in place, Germany, France, Britain, the Netherlands and Italy, in descending order, will continue to be the dominant milk producers in the EU.

 

The commission said the additional production is "fully justified" given current market conditions and the outlook through 2014.

 

Fischer Boel said demand for high value-added dairy products -- particularly cheese -- will continue to rise both within Europe and around the world and European farmers should be equipped to meet that increased demand.

 

In 2003, farm ministers put off a proposed 2 percent increase in quota until the European Commission completed an assessment of the impact of the reforms. That assessment was delivered last week along with the quota proposal.

 

The commission said for the first time since 1968, the EU today is offering no export subsidies on dairy products. The EU also holds no stockpiles of surplus dairy products. "Internal disposal aids" are also set at zero. In short, the reforms are working, the commission said.

 

"The market outlook report concludes that between 2003 and 2007, expanding cheese and fresh milk production absorbed an additional 5.5 million tonnes of milk, while overall milk production remained stable," the European Commission said.

 

Between 2007 and 2014, the EU will need another 8.0 million tonnes to meet domestic demand, particularly for cheese, the EU executive said.

 

It added, "Meanwhile, the outlook for the world market is positive, with growing demand for EU foods in particular in emerging markets. Leaving quotas unchanged would prevent the EU from exploiting rising demand and healthy price levels."

 

The EU plans to abolish its milk production quota scheme in 2015 and further increases in quota are possible as part of the Common Agricultural Policy (CAP) "health check" currently under way.