May 16, 2013


UK dairy sector requests EU to reject milk supply controls



The British dairy industry is urging EU policymakers to reject proposals to retain milk supply controls after quotas go in 2015.


The National Farmers Union (NFU) and Dairy UK have both warned that proposed measures to penalise farmers who produce too much milk while those that reduce production are rewarded would fly in the face of aims to encourage a modern, market orientated milk sector.


The proposal, driven by French MEP Michel Dantin, is part of the European Parliament's negotiating mandate on Common Agricultural Policy (CAP) reform, agreed in March. The Parliament proposals retain a strong element of supply management and the milk quota administrative framework after milk quotas are abolished in 2015.


The proposed system would, in the event of a severe crisis in the dairy market, grant aid to farmers who voluntarily cut production by at least 5%, compared with the same period the previous year. It would also impose a levy on farmers who have increased their production.


The EU Council of Ministers, which will negotiate the final package of measures with the Parliament with a view to securing a final deal next month, has reject this proposals, along with other market management measures proposed by the Parliament.


Department for Environment, Food and Rural Affairs (DEFRA) Sectretary Owen Paterson is among those leading the opposition to what he has described as 'protectionist, backward-looking' proposals.   


NFU dairy board chairman Mansel Raymond said dairy farmers were working with the knowledge that controls on how much milk they produce will end in 2015. But he said there were some in Europe who would like the supply of milk within the EU to 'remain shackled through the back door'.


He acknowledged that dairy farmers face increasingly volatile market conditions but said existing tools, such as intervention, public storage and direct payments made to dairy farmers are 'sufficient'.


"However, there should be no place in a modern market-orientated CAP for supply management measures that penalise farmers for increasing their production," he said.


He said such a move would act as a disincentive to young farmers coming into the industry with "the means to invest and seize the opportunities posed by the growing global demand for dairy products".


He said it was wrong that they would receive penalties if they were unlucky enough to grow their business during a global market downturn, while farmers who had decreased their production received an incentive payment.


Dairy UK Director General Jim Begg said the removal of milk quotas presented the European dairy industry with enormous opportunities for growth that will provide a strong foundation for the future.


He said, "The EU should build policy for the dairy sector around confidence in the ability of the industry to be competitive in the world market. The EU must continue the evolution of CAP dairy sector policy towards greater market orientation. The industry has been building its plans for the future based on this expectation."


He said there were 'practical and achievable solutions' to price volatility, including the operation of an effective safety net, the development of futures instruments and greater investment in value-added products by the industry.


"In a world of growth opportunities, seeking to address price volatility by reducing productive capacity is self-defeating. It is also unworkable in the current budget context," Begg said.


The French Government has recently launched a paper outlining three options for dairy market management that include supply management.