Share

End of EU milk quotas raises cheers

London - European Union (EU) 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 exporter Ireland welcomed the lifting of the quotas which were first introduced in 1984 to cope with infamous "milk lakes" and "butter mountains" when 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 €15bn 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."

Export boost

A study by the Irish Farmers Association (IFA) estimated the ending of quotas would create 9 500 extra jobs in Ireland, and upwards of €1.3bn 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 chairperson 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.

The potential for milk prices in the EU to become more volatile following the lifting of quotas could create an opportunity for greater use of futures markets.

Euronext announced on Tuesday it will launch a new dairy derivatives complex on April 13.

The offering includes futures for butter, skimmed milk powder and whey powder, and replaces former skimmed milk powder derivatives that failed to take off.

Germany's Eurex exchange already quotes butter, skimmed milk powder and whey powder derivatives, but traded volumes are thin.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.93
-0.2%
Rand - Pound
23.90
-0.0%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.1%
Platinum
907.85
+1.2%
Palladium
1,012.25
+1.1%
Gold
2,218.87
+1.1%
Silver
24.85
+0.8%
Brent Crude
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
+2.8%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders