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Milk Quotas Come to an End

31 March 2015

EU - Today 31 March is the last day of the milk quota regime in the EU.

The system was introduced in 1984 as a temporary measure to address the structural oversupply on the EU market that had led to the infamous "milk lakes" and "butter mountains".

EU Member States and the European Commission decided in 2003 that quotas would not be prolonged beyond 2015

Since then transitional steps have been taken to provide a soft landing, such as a gradual increase of national quotas.

Now, with the global demand expected to increase by an average of 2,1 per cent a year, the end of quotas means that EU farmers will be able to fully benefit from this growth, especially for added-value products like cheese.

Commissioner for Agriculture and Rural Development, Phil Hogan, said: "The end of the era of milk quotas represents the closing of a chapter in the history of the European – and indeed global – dairy sector.

“It represents the opening of a new chapter – a new era without production constraints."

Several support measures remain in place for milk producers: from direct payments and voluntary coupled support to investments through rural development programmes or even public intervention and private storage if need be.

The Milk Package also reinforces the dairy farmers' position in the market chain.

In the UK National Farmers Union Dairy Board Chairman Rob Harrison said that it will be difficult to predict what will happen once quotas are abolished.

“Farmers and dairy processors here do have some concerns about how other EU countries will react to the ending of quotas,” he said.

“Some are rapidly increasing their output without an end market for these goods. With milk prices yet to show any strong signs of recovery, this could push farmgate milk prices down further in the EU, and stall any recovery in the dairy markets.

“It’s vital that expansion in any Member State is planned in accordance with available market opportunities.”

 Alexander Anton, Secretary-General of the European Dairy Association said: “The end of the milk quota is one more step in towards market orientation of the Common Agricultural Policy. A step that has been prepared for in a political process that started in 2003. The dairy sector, dairy farmers and their milk processing companies, are prepared for this step."

Dr Judith Bryans, Chief Executive of Dairy UK said: “The end of the quota system is a landmark in the history of the European dairy industry. It is another step towards the ongoing development of a market-led, globally competitive European dairy sector that will be able to fully exploit a growing demand for dairy products worldwide. The dairy industry’s future prospects are real and exciting and we strongly believe that strengthening a market-oriented industry will benefit the whole dairy supply chain.

“Although quotas may have been considered as an appropriate response at the time of their introduction, they also held back the development of a truly efficient and competitive European dairy industry over the last thirty years. However, it is now time for the European industry to play a greater role in the global market.

“We are keenly aware that with a free market comes greater volatility, and therefore the dairy industry must work hand-in-hand to mitigate the effects of volatility. The UK industry has been gearing up for this new era and is getting ready to face new challenges.

“We have much to be proud of in the dairy industry and we will keep working with our industry partners, government and parliamentarians to ensure a sustainable future for British dairy in this new era.”

TheMeatSite News Desk

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