Coveney warns of milk quota bottleneck until 2015

ESTIMATED milk deliveries in April were 18% higher than in 2010 — a trend which would leave Ireland exceeding its allowed milk quota by 8.67%, if it continued.

Agriculture Minister Simon Coveney has urged dairy farmers to carefully plan their production and pay close attention to the quota limitations, if they are to avoid potentially very damaging super levy fines.

Irish dairy farmers must continue to operate on the assumption that no further changes will be made to the quota arrangements agreed in the context of the CAP Health Check, he said.

Mr Coveney has warned that the Food Harvest 2020 target of a 50% increase in milk production by 2020 will require a massive expansion in the five years from 2015 to 2020, because Ireland is allowed additional milk quota of only 1% per year until 2015.

One of the possible solutions is an EU-wide quota, allowing some countries go over quota if others are under quota, but that is not a runner politically at the moment, according to the minister.

“I am in the process of trying to put together a coalition of countries in order to find some kind of political resolution to this matter,” he said.

“There are four or five EU countries that want to expand their dairy industries and which need the flexibility to do so, but it will be a significant political challenge in order to be successful.”

“I understand that France and Germany do not even want to entertain a discussion on this issue.”

“Many people in both those countries would rather not see an end to the milk quota system. They see restricting milk output as a way of securing price consistency in future. Therefore the very idea that we would allow countries like Ireland, Denmark and the Netherlands to expand milk production dramatically in the short term is perceived as a risk to milk price stability between now and 2015.”

“The counter argument is that milk production is falling in certain countries. In my view, overall milk production across the EU would not increase if Ireland, Denmark and the Netherlands were to increase production dramatically. That is because countries like Slovenia are 17% below quota. Our closest neighbour, Britain, is well below quota and it is not an issue there because production is nowhere near the quota.

“The irony is that the expansion of the Irish dairy industry may not affect European markets at all,” said Mr Coveney, who raised the issue at this week’s informal EU Agriculture Council meeting in Hungary.

“It is up to me to make persuasive arguments to open up a reasonable discussion on this issue,” he said.