Farm Ireland

Saturday 24 March 2018

Flexibility on quotas ruled out by Brussels

Commission rejects calls for additional milk to be released ahead of 2015

Declan O'Brien

Declan O'Brien

No further changes to the milk quota regime will be forthcoming ahead of the abolition of quotas in April 2015.

This will disappoint dairy farmers hoping for extra allocations of milk quota to cope with the expected surge in Irish milk production.

As a result, fears are now growing that quota values will spike over the coming years as dairy men attempt to avoid super levy fines.

Despite this, a draft report from the EU Commission, regarding the impact of the Health Check reforms on the dairy sector, claims that a hike in quota prices is unlikely in most member states.

"Milk quota prices have a very low value, already at zero in some member states, and decreasing in most of the others with a view to reaching zero in 2015," stated the report.

"Under these circumstances there is no reason to revisit the Health Check decisions with regard to the gradual increase in quotas and the end of the quota regime on April 1, 2015."

Under the CAP Health Check, a 1pc increase in milk quotas was introduced for five consecutive years -- beginning last year -- and a further 1pc hike was made available due to fat corrections.

Controversially, the report also stated that the Commission would consider introducing compensated production reduction measures to correct occasional imbalances in the market.

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According to the report, such a policy would allow producers to reduce supplies on a voluntary basis and would aim to take between 1pc and 2pc of overall production out of the market.

While Ireland has targeted a 50pc increase in milk production by the end of the decade, the Commission has forecast that total supply across the EU will expand by just 3pc in this period.

Supply growth would be curtailed by a decrease in milk prices, the report claimed.

But the failure of the Commission to offer greater flexibility on milk quotas has been slammed by the IFA.

Even with the extra quota allocations under the Health Check, it is expected that Ireland, Holland, Denmark and Germany could face super-levy difficulties for the 2011/12 quota year.

In order to prevent this acting as a barrier to dairy sector expansion, the IFA has called for member states with moderate levels of over-quota production to be allowed to offset this against unused milk quota in other member states.

IFA dairy chairman Kevin Kiersey said there would be no soft landing for milk quota prices in Ireland unless action was taken by the Commission.

"The majority of EU member states produce far less milk than their quota would allow them and, for them, milk quotas are already irrelevant and valueless. In these countries, clearly, the so-called 'soft landing' is already well under way," Mr Kiersey said.

"However, in some of the major dairy countries, including the Netherlands, Denmark and Ireland, quotas are getting dearer, and will constitute both a severe restriction and a rising cost for progressive farmers."

Mr Kiersey said it was simply incorrect to suggest that nothing further needed to be done to smooth the transition to quota abolition.

He urged Minister for Agriculture Brendan Smith and Ireland's MEPs to look for greater flexibility in quota management to allow for a level of sustainable expansion before 2015.

Mr Kiersey confessed to being "puzzled" by the proposal to provide for compensated voluntary reductions of milk supplies by farmers.

He said the proposal lacked any credibility as an emergency measure to deal with market slumps, and was "fundamentally contradictory" to the Commission's decision to phase out milk quotas.

Irish Independent