On April 1st, 2015, the European Union officially did away with the milk quota regime that has applied to dairy farmers in all EU member states for the past 31 years. The dairy industry and indeed the European agricultural economy are now discerning the best measures to take to ensure a viable dairy sector in the EU.
The milk quota system was established by the European Union Council in 1984, a period of surplus dairy production. Under this regime, each member state had a national production quota which it would then apportion to its dairy farmers. Any farmer that exceeded production levels was required to pay a fine. Now, in 2015, demand for milk has outpaced production and as of April 1, 2015, EU farmers can produce as much milk as they want without being fined.
In the recent wake of this repeal of regulation in the dairy sector, COPA COGECA, a European agricultural union joining farmers and cooperatives, summarized the implications for European dairy farmers and suggested strategies for moving forward. COPA COGECA’s Secretary General Pekka Pesonen stated that “the EU’s regulatory framework already includes market measures which could help protect producers against market volatility…” but they “no longer represent a real ‘safety net’ able to help milk producers in times of severe market imbalance.” Possible solutions included reevaluating income and margins insurance to better help farmers manage the multiple risks and a call for the development of future markets to stabilize volatility. He continued by stressing the importance of coupled support for Less Favoured Areas (LFAs), for which there are many structural and natural difficulties, such as higher milk collection costs in mountainous regions, for example.