Member States Divided as EU Abolishes Milk Quotas

EU | April 1, 2015, Wednesday // 12:07|  views

Dairy farmers gather during a demonstration at `Place du Luxembourg` near the European Parliament building in Brussels, Belgium, 31 March 2015. Photo: EPA

The European Union abolished milk quotas on Tuesday after they had been in existence for more than 30 years, a decision which caused division among member states.

This step is expected to expand opportunities for some dairy farmers, while it will most probably pose threat to the livelihood of others, EurActiv reports.

The quotas on cow's milk were introduced in 1984 to prevent overproduction, which resulted in “milk lakes” and “butter mountains”, as EU supplies far outstripped demand.

European Commissioner for Agriculture and Rural Development Phil Hogan said that the abolition was both a challenge and opportunity for the EU, the BBC reports.

According to him, dairy producers will be better positioned to benefit from the demand for their products, especially in Asia.

However Hogan, who was aware of the risk of price volatility, assured that the EU will remain vigilant in case a threat emerged to Europe's milk producers.

Under the quota system, dairy farmers were guaranteed a price for their milk, which was much higher than on world markets, regardless of demand.

In case producers exceeded their quotas, they had to pay a levy, which was only applied if the national quota was also exceeded.

In particular, Hogan noted the opportunities to be explored in the value-added processing, which holds the potential of creating jobs and and growth in the rural areas.

The Commissioner also pointed to the new market opportunities, which the EU has failed to utilise in the past 30 years, but other countries such as New Zealand did.

Farming groups in top producer Germany, leading exporter Ireland, Netherlands and the European Dairy Association all welcomed the abolition of milk quotas.

The Irish Farmers Association estimated that the abolition of quotas would create 9500 new jobs in Ireland and increase export revenue with EUR 1.3 B on an annual basis.

Other countries, such as France are more cautious, while Belgian and other EU farmers protested the decision outside the building of the European Parliament in Brussels on Tuesday.

The European Milk Board said that it was likely that the market would not be able to cope with a considerably increased production.

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Tags: EU, milk, quota, dairy, production, abolition, farmer, overproduction, surplus, demand, Phil Hogan, agriculture, price, levy, Germany, France, Netherlands, ireland, market


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