Expiry of the milk-quota system

EESC opinion: Expiry of the milk-quota system


  • The EESC considers the abolition of the milk quota system from 31 March 2015, as decided in 2008, to be a fundamental change. Since the introduction of this comprehensive method of guiding production on 1 April 1984, it has over time become increasingly clear that dairy prices and farmers' incomes have not been sufficiently effectively supported and stabilised and that dairy production in the EU has decreased, while rising significantly worldwide.
  • The EESC argues that EU dairy policy after expiry of the milk quota system, i.e. post-2015, must not only allow for growth and expansion but should also be obligated to avoid abandonment of dairying and to provide support for smaller farmers especially in disadvantaged areas and mountainous regions . It must allow EU farmers and ultimately the EU economy to benefit from growing global dairy markets, while recognising and fostering the equally valuable economic and social contribution made by small-scale disadvantaged dairy farms in many European regions.
  • The EESC believes that this must be done by fully utilising Pillar II provisions of the CAP 2014-2020 and the Milk Package, to ensure dairy farm families can be sustained throughout the territory. Participation in producer organisations which can help farmers improve their standing in the supply chain must be encouraged, and knowledge transfer measures targeted to help farmers improve technical and economic efficiencies.
  • However, the EESC considers that the Pillar II budgets and measures, or the measures in the Milk Package which now forms part of CAP 2014-2020, will certainly not suffice to protect vulnerable dairy farmers whether within or outside disadvantaged or mountainous areas. Additional measures may be required to ensure those farmers receive viable incomes and a fair share of market returns. They should also benefit from advisory services on production efficiency, diversification and re-orientation to help them make the best decisions for their future and that of their successors, bearing in mind the limitations of disadvantaged enterprises in terms of income generation capacity.
  • The EESC considers it equally critical to ensure that commercial and competitive dairy farmers in all areas, including those more suited to sustainable and competitive dairy production for export are allowed to grow their enterprises to respond to fast rising global demand, and in so doing generate increased employment and revenue for the economy in rural areas of the EU. However, the main challenge for these farmers will be the massive income variations related to the volatility of both dairy commodity prices (and hence producer milk prices) and input costs. It is essential that the EU facilitate the development by Member States and industry of taxation solutions and simple hedging instruments, such as fixed-margin contracts, easily accessible by farmers. 
  • The EESC urges that the inadequate level of the "safety net" provisions built into the new CAP be revised, and kept under ongoing review, to ensure they bear a closer relation to actual production costs.
  • Finally, the crucial role played by co-operatives in the dairy sector must be recognised and fostered. Co-operatives play a leading role in the global dairy industry, with four co-operatives in the top 10 world dairy companies according to Rabobank's July 2014 survey . Co-operatives can play a much stronger part in supporting dairy farmers through the vagaries of volatility than private milk purchasers/processors, as their milk suppliers are by and large also their shareholders. Also, they offer much more sustainable long term commitments to purchasing milk from farmer members at viable milk prices