EU rejects farmers' milk demands

A new European Commission report out today has rejected farmers’ demands to impose tougher milk production quotas.

The investigation into retail milk prices in the midst of a dairy sector crisis has triggered a farmers’ revolt.

Prices to milk producers have halved since 2007 and are now at an all-time low.

The report said that Brussels was pressing ahead with plans already agreed by EU governments to end milk quotas entirely by 2015.

Reversing that plan now would not resolve the current crisis, insisted EU Agriculture Commissioner Mariann Fischer Boel.

However, she did offer the sector support in the form of continued production subsidies and top-up export payments to help them compete in world markets.

As the report was unveiled farmers were back on the streets of Brussels protesting about the need for support.

But their key demand – reinforcing production quota limits to help boost prices - was rejected.

“We have to do all we can to help our milk producers. We will continue to use all the measures we possess to stabilise the market,” said Ms Fischer Boel.

“But, as clearly stated by the European Council (EU governments), we will not reverse our policy of gently phasing pout quotas.

“Putting this into doubt would only create uncertainty and would do nothing to help the situation anyway.”

The Commission has been working for years to streamline the Common Agricultural Policy and end the notorious milk lakes and butter mountains generated by decades of open-ended support for farm production regardless of demand.

But weaning farmers off generous cash backing is tougher in times of economic downturn.

Tory MEP and agriculture spokesman in the European Parliament Richard Ashworth said the Commission was right to stick to its policy of ending milk quotas.

“We cannot return the EU to butter mountains and milk lakes and the current situation shows just how misguided past policies on milk have been,” he said.

“In many supermarkets a litre of milk sells at nearly half the price of a litre of water.

“This is an absurd situation but it cannot be rectified by trying to rig the market. Instead milk needs to be better marketed.”

He went on: “Instead of tightening the market further, we need to free milk producers from the straitjacket of quotas and allow them to come up with new, innovative and exciting milk products. That is the future of the industry.”

The report said the Commission would back a series of measures to stabilise the milk market, including support for private storage of surpluses and the waiving of a December date for state aids or market-rate loans to tide farmers over.

Two-thirds of such payments can now be handed out from mid-October, said the Commission.

National Farmers Union Dairy Board chairman Gwyn Jones welcomed the report, saying: “The additional support measures proposed by the Commission offer a proportionate short-term response which has the potential to inject greater support and stability into the market, without deviating from current policy. This is important.

“Farmers require certainty as well as predictability. The certainty has to be that quotas are finished.”

He added: “All those organisations and governments that are looking to the European Commission to provide simple solutions to the crisis in the EU dairy sector are looking in the wrong direction.

“I’m pleased that the report sticks to the plan that is creating a competitive market-orientated industry that is less reliant on public support.

“We have to make the market work better for farmers, not look at outdated, crazy ideas such as cutting milk quotas, which are irrelevant to today’s problems.”

A Commission spokesman said the retail dairy sector inquiry would be looking at “potential anti-competitive practices” in the food supply chain, and particularly in the dairy sector.

“If the Commission finds that competition is not functioning, it will not hesitate to use all its powers under the Treaty. National competition authorities have an equally important role to play.”