EU lifts milk quotas

[LONDON] European Union milk quotas were lifted on Wednesday after more than 30 years, creating expansion opportunities for some dairy farmers while potentially threatening the livelihood of others.

Farming groups in top producer Germany and key exporter Ireland welcomed the lifting of the quotas which were first introduced in 1984 to cope with infamous milk lakes and butter mountains as EU supplies far outstripped demand.

But a vigil was held by some other dairy farmers outside the European Parliament in Brussels on Tuesday, lighting a "warning fire" and holding funeral march.

The EU regime included individual and national production quotas. If any producer exceeded their quota then they had to pay a levy although this was only applied if the national quota was also exceeded. The system of quotas, and the threat of levy, helped to cap the expansion of EU production.

The European Milk Board, a federation of dairy farmers with member organisations from 13 countries, said it was likely that the market would not be able to cope with significantly expanded production in a reasonable way. "Chronic price collapses are inevitable, the next crisis is on its way," EMB president Romuald Schaber said.

Germany's national farmers' association DBV, however, welcomed the end of quotas. "Milk producers will be freed from the costs of the quota,"the DBV said in a statement. "In the period of the quota, German farmers had to shoulder an estimated 15 billion euros in costs for levies, purchasing of quotas and quota fees," the DBV said. "The end of quotas brings more freedom for commercial decision-making about how much milk to produce, gives more responsibility for developing your own farming company but also more fluctuations in milk prices." A study by the Irish Farmers Association (IFA) estimated the ending of quotas would create 9,500 extra jobs in Ireland, and upwards of 1.3 billion euros (US$1.4 billion) annual additional export revenue. "Facts would suggest that Irish dairy farmers are well placed to capitalise on the end of quotas, and in so doing help develop the dairy and agribusiness sector with major increases in direct and indirect employment," IFA National Dairy Committee chairman Sean O'Leary said.

The European Dairy Association, which represents milk processors, also backed the change. "It goes without saying that the end of the quota will lower the administrative burden on all levels. This will naturally further enhance the competitiveness of the whole sector," EDA Secretary General Alexander Anton said.

REUTERS