A new EU scheme allowing dairy farmers to agree milk production cuts is unlikely to affect the main flush of EU milk production this spring.
EU Farm Commissioner Phil Hogan has said the new measure allowing farmers to jointly plan milk production proves the EU’s strong commitment to support farmers.
By reducing the EU’s milk production, still rising despite a global dairy price slump, the measure could lift milk prices.
But it has already been ruled out for the Irish dairy industry, one of the fastest growing in the EU, and the reaction has been poor in Germany, a major milk producing state.
Special EU legislation was needed to allow dairy farmer organisations agree production cuts, because of the implications for competition in the industry, and member states must ensure agreements to cut production do not undermine the market.
“Strictly, it is entirely up to producer groups and coops to decide if they wish to make use of this exemption from EU competition policy,” says CAP reform expert Alan Matthews in the capreform.eu/ blog.
But he warned it is highly likely that a financial incentive from member states will be needed to encourage milk supply cuts. Therefore national legislation may also be needed, further delaying the measure.
Mr Matthews said, “It is hard to see why a member state would opt to use its limited financial envelope to assist its farmers in this way.”
He said, “If the intention was to have a measure in place prior to the main flush of EU milk production this spring, this is unlikely to happen.”
TJ Flanagan, Dairy Policy Executive with ICOS, which represents the Irish co-operative dairies, said: “The introduction of voluntary supply side measures raises more questions than answers, specifically related to its feasibility, implementation and monitoring.”
Voluntary restraint will not cut production enough across the EU, predicts the European Milk Board (EMB), which represents about 100,000 dairy farmers in 15 European countries.
EMB President, Romuald Schaber pointed out that milk reductions in some countries would be offset by increases in others.
“The current EU policy measures are more of a distraction than a solution,” he said.
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