30 Mar 2015
MILK QUOTAS END 31 MARCHBrussels Daily
On 31 March 2015 the EU milk quota regime comes to an end. On this page you will find a selection of relevant information around this event.
First introduced in 1984 at a time when EU production far outstripped demand, the milk quota regime was one of the tools introduced in overcoming these structural surpluses.
Successive reforms of the EU’s Common Agriculture Policy have increased the market-orientation of the sector and, in parallel, provided a range of other, more targeted instruments to help support producers in vulnerable areas, such as mountain areas where the costs of production are higher.
The final date to end quotas was first decided in 2003 in order to provide EU producers with more flexibility to respond to growing demand, especially on the world market.
It was reconfirmed in 2008 with a range of measures aimed at achieving a “soft landing”.
Even with quotas, EU dairy exports have increased by 45% in volume and 95% in value in the last 5 years.
Market projections indicate that the prospects for further growth remain strong – in particular for added-value products, such as cheese, but also for ingredients used in nutritional, sports and dietary products.
1970s and 1980s
The system of guaranteed prices at a level well above world market prices leads to a structural surplus, with the European Commission obliged to buy in large volume of butter and Skimmed Milk Powder into public intervention. On occasions these “mountains” exceeded 1 million tonnes for both SMP and butter.
European Commission proposes the introduction of milk quotas. Rules agreed by EU Agriculture Ministers in March 1984.
Milk quotas enter into force.
Successive policy reform exercises (in 1992, 1999, 2003) see a reduction in the system of guaranteed prices, and in return farmers were paid a Direct Payment in order to stabilise revenues.
Most of these payments were then “decoupled” from production – further enhancing the market orientation of EU agriculture.
For the dairy sector, following the reduction in the guaranteed price from 2003, producer prices picked up and have developed positively, with fluctuations.
Other CAP tools, such as payments for less favoured areas, are aimed at providing additional support for vulnerable regions.
At the same time, Rural Development Programmes have provided options to individual farmers to apply for additional funding. For example, 1.4 billion EUR of EU funds from 2007-2013 stimulated more than 10 bn EUR of Farm Modernisation Investments in the dairy sector from 2007-2013.
CAP “Mid Term Review” deal agrees that milk quotas should be abolished in 2015.
CAP “Health Check” confirms that milk quotas will expire end of March 2015, and agrees gradual increase in quotas for 5 years.
Council and EP agreement on Milk Package – a policy response to the 2009 dairy market crisis – including new rules on contracts and improving collective bargaining for producers.
CAP Reform agreement includes substantial changes to Direct Payments system, including options for Voluntary Coupled Support.
31 March 2015
End of quotas
Short video clips
Milk Market Observatory (MMO)
The aim of the MMO – introduced in April 2014 – is to provide the EU dairy sector with more transparency by means of disseminating market data and short-term analysis in a timely mannerand to foster the dialogue between market analysts along the milk supply chain.
Milk market situation
Monthly updated slide-show.
>> Go to the latest update [2 MB]
Short-term outlook for EU arable crops, dairy and meat markets
Based on reflections of market experts within the European Commission, using the latest data available.