Mixed views on milk quota rise

Mar 25 2008 by Sam Wood, The Journal

A EUROPEAN decision to increase the milk quota has met with a mixed reaction from dairy industry leaders.

EU agriculture ministers have agreed a 2% milk quota increase which will kick in from next month.

The move is the next step in the possible abolition of the quota, which could come in 2015.

The increase will come in from April 1 and means a further 2.84 million tonnes of milk could be produced each year across the EU.

The NFU said it supported the move as a “sensible response to soaring demand for milk”, but Dairy UK and a North East dairy farmer have both warned it could harm the industry in the UK if increased EU milk supplies lead to a drop in prices.

NFU dairy representative in the North East, Denis Gibb, who farms at Ponteland in Northumberland, said that while the NFU supported the gradual phasing out of the quota he had some concerns about the increase.

Mr Gibb said: “This country doesn’t use anywhere near its quota for producing milk so we will not benefit from this increase, or when the quota is removed completely, probably in 2015.

Other countries, such as Holland, use their quota right up to the limit. They will now be able to produce more, which could be imported into this country and possibly impact upon prices. In the short term though this increase is likely to have little impact.”

Agriculture Commissioner Mariann Fischer Boel said she was delighted ministers had backed the European Commission’s proposal.

She said a report published by the commission in December showed the market offered ample opportunities to absorb a 2% quota rise.

Demand for milk in the EU grew significantly between 2003 and 2007, and an estimated eight million tonnes of extra milk production will be required to meet continued growth between 2007 and 2014, the analysis showed. The outlook for both demand and prices on the world market is described as equally positive.

Mrs Fischer Boel said: “Demand for high value-added dairy products will continue to rise both in Europe and around the world. We need to equip our farmers to meet that increased demand.” Only Germany and Austria opposed the move.

A Dairy UK spokesman said: “We want a smooth landing for the abolition of the quota regime, but this will get us off to a bumpy start. This excessively large quota increase will offer no gain for British Dairy farmers and could harm them.” But the NFU Dairy Board has supported the move. A spokesman said: “The NFU supports phased increases in quota as the best way of unwinding the regime and feels it is sensible to start this process while markets are strong, rather than delaying until markets may be considerably weaker.”