Policy Markets

Producer Groups Oppose Supply Management After Quota Removal

EUROPE – European Parliament negotiators have been urged to reconsider proposals that could see milk supply management continuing post 2015.

15 May 2013

2 minute read

The proposals, which will come part of a raft of changes with the Common Agricultural Policy reform, will continue supply management intervention. Furthermore, the proposals include a system which imposes levies on farmers who increase production and bonuses for those who voluntarily reduce output by 5 per cent.

Doing so is counter productive and is not the way to expand the EU dairy sector, according to Joop Kleibeuker, General President, European Dairy Association.

Mr Kleibeuker advocates market safety nets for farmer protection but insists supply management legislation is not what European farmers need as global milk demand continues to grow.

"In order to reduce the consequences of extreme downward price volatility an operating and effective safety net is a necessary and easy-to-deliver tool," said Mr Kleibeuker.

"The milk quota system only worked to stabilise producer prices because they operated in conjunction with the open ended use of a full range of consumption subsidies, many of which have been discontinued now. We believe that in the current market environment supply management measures will not work to stabilise prices".

The EDA has suggested that the CAP negotiators look at the growing opportunities for dairy products and the potential export growth as world demand for milk rises. This means rewarding expansion and improvement and not a system that constrains businesses.

Penalising farmers for expanding their enterprises is not the way to ensure a modern market oriented dairy industry, said NFU Dairy Board Chairman, Mansel Raymond.

Mr Raymond voiced concerns that young farmers entering the profession will be dissuaded from investment if, at time of economic downturn, they are take a financial hit for providing more milk, while lower output farms are rewarded.

"There should be no place in a modern market-orientated CAP for supply management measures that penalise farmers for increasing their production," said Mr Raymond. “Take a young farmer coming into the industry who has the means to invest and can seize the opportunities posed by the growing global demand for dairy products. Under the plans from the Parliament, that same young farmer could face crippling penalties purely because they grew their business and increased production."