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EDITORIAL COMMENT: A Whole New Era: The EU Without Milk Quotas

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EU, Global Dairy Industry Prepare For End Of EU Production Quotas

EU’s Ag Commissioner Says End Of Quota Regime Is Both Challenge And Opportunity

The European Union’s milk quota regime comes to an end on Tuesday, March 31, 2015, and EU Agriculture Commissioner Phil Hogan says the end of the quota regime “is both a challenge and an opportunity” for the EU.

The end of the quota scheme “is a challenge because an entire generation of dairy farmers will have to live under completely new circumstances and volatility will surely accompany them along the road,” Hogan explained.

“But it certainly is an opportunity in terms of growth and jobs,” he continued. “Through increased focus on valued added products as well as on ingredients for ‘functional’ food, the dairy sector has the potential of being an economic driver for the EU.”

Also, global dairy demand is projected to increase at a 2 percent annual rate, “so the removal of production constraints in the dairy sector can be regarded with optimism from this perspective,” Hogan said.

EU milk production rose by about 5 percent last year, slowing down towards the end of the year, “so we don’t expect a major increase to follow the end of the quota regime in the short term,” Hogan said.

“The abolition of milk quota presents a tremendous opportunity for the Irish dairy sector which we can look forward to with confidence,” said Simon Coveney, Ireland’s agriculture minister.

Not everybody is enthused about the end of the EU’s milk quota regime.

The European Milk Board (EMB) is planning a “symbolic action” in front of the European Parliament on Tuesday, the last day of the quota system, to highlight what it considers the major shortcomings of the quota follow-up system. In the future, EU dairy farmers will have even less market power that will allow them to defend their interests, the EMB noted.

In its March newsletter, the EMB said the “most likely scenario” after April 1 “is that dairy farmers will boost their production in many EU countries, regardless of the situation in the milk market. Another drastic price collapse seems inevitable, along with the next market crisis.”

The EMB is calling on European policy-makers to implement a market responsibility program when there is a risk of milk market imbalance. When the margin reaches a crisis level, a restraint on supply would be imposed (at least 5 percent bonus for reducing production); and a market responsibility levy would be charged from the first kilogram for dairy farms increasing production.

“Post quotas, milk producers will continue to be exposed to market volatility, which is a global phenomenon,” said Mansel Raymond, chairman of the Copa-Cogeca Milk and Dairy Products Working Party. “Volatility is here to stay and it is a risk factor for farmers’ business and strongly impacts on investments.”

“In this new post-quota era, the right tools must be in place Send me more information