Levies for Exceeding Milk Quota Total €340 Million

EU - Certain Member States face levies totalling just over € 340 million for exceeding their milk quotas during the 2007/2008 marketing year, according to a provisional calculation by the European Commission, based on Member States' annual declarations.
calendar icon 15 October 2008
clock icon 3 minute read

Last year the total levy amounted to € 221 million. Seven Member States (Austria, Cyprus, Ireland, Italy, Germany, Luxembourg, and Netherlands) exceeded their delivery quotas. Altogether these account for an overrun of 1 217 000 tonnes, resulting in a levy of € 338.7 million. Some 47% of the total is due to excess deliveries in Italy and 30% of the levy is due from Germany.

Italy exceeded its delivery quota by 5.7%, Cyprus exceeded by 3.9% and Austria by 3.2%. As for direct sales to consumers, Cyprus, Luxembourg and the Netherlands reported overruns, totalling 4 673 tonnes resulting in a levy for direct sales of € 1.3 million, of which 92% is due from the Netherlands.

For the 2007/08 quota year (April 2007-March 2008), the total quota for deliveries to dairies was 139.6 million tonnes. The quota is divided into 1 050 000 individual quotas for the whole of the European Union (EU-27). There is also a separate quota of 3.4 million tonnes for direct sales to consumers which is divided into 527 646 individual quotas.

The total levy to be paid is substantially (53%) higher in 2007/2008 than in 2006/2007 because adjusted deliveries increased more in some countries than the respective national quotas. This was most notable in Cyprus, Germany, and the Netherlands. Excluding Romania and Bulgaria, where the quota system was implemented for the first time in 2007/2008, the adjusted deliveries in the EU25 were 767 000 tonnes higher than in 2006/2007, whereas the quota increased by 491 000 tonnes, in accordance with the 2003 Reform of the CAP. Producers in 20 of the 27 Member States will not pay any levy in respect of deliveries because the national quotas have not been exceeded.

How the system works

Cow's milk is marketed in the European Union on the basis of quotas initially introduced in order to achieve a balance between supply and demand and curb surpluses. Each Member State receives two quotas, one for deliveries to dairies, the other for direct sales to consumers.

These quantities are broken down among producers (individual quotas) in each Member State. Where there is an overrun in the national quota, a surplus levy is payable in the Member State concerned by the producers who have contributed to the overrun. This surplus levy has to be paid by producers of cow's milk on all quantities of milk or milk equivalent in excess of the quota marketed during a 12-month period, which runs from 1 April to 31 March. Each year before 1 September, the Member States must report to the Commission on the results of the application of the milk quota scheme over the previous period. This notification must be in the form of a completed questionnaire containing all the data needed to calculate the surplus levy. The rate of the surplus levy is € 27.83/100kg of overrun.

Quotas to be phased out by 2015

In the 2003 CAP reform, it was decided that milk quotas would be phased out on 1st April 2015. In its CAP Health Check proposals, the Commission has proposed to increase quotas by 1 percent per annum between 2009/10 and 2013/14 to allow a 'soft landing', or a gradual adaptation to a world without quotas.

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