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13 MILK QUOTAS
13.1 Milk quotas were introduced as a response to overproduction but these can reduce market orientation as they distort responses to price signals. Quotas can prevent efficiency gains in the sector by slowing down restructuring.
13.2 The Commission propose to introduce a 'soft landing' for the dairy sector via a gradual annual increase of milk quota leading to its eventual phasing-out in 2015/16. The Commission also recognises that certain regions may face particular difficulties during this transition and propose that, in these circumstances, revised National Envelope provisions may be appropriate.
13.3 The consultation asked "What are your views on proposals for gradually increasing milk quotas, as a prelude to ending milk quotas in 2015, and abolition of private storage aid for cheese and disposal aid for a number of other dairy products?"
13.4 Thirteen out of the 25 replies to this question were very general, brief answers agreeing with the proposals while an additional three simply commented that removing quotas will have little effect.
13.5 A wider interest organisation and a local authority noted their concern over small producers, especially in marginal areas, and agreed that they needed support through National Envelope provision. One other wider interest organisation supported the proposals but did not support the use of National Envelope provisions. A local authority felt that National Envelope provisions are too targeted at the environment or at quality and marketing.
13.6 A farming stakeholder and a local authority commented on issues relating to specific areas:
- the availability of annual grass quality within crofting areas to enable dairy operations (farming);
- island areas will face difficulties as well as mountain areas and national envelope criteria should be relaxed for dairy sector in island areas "to further assist in restructuring businesses to help in the transition phase up to 2015".
13.7 Three stakeholders expressed concern about various possible effects of the changes:
- the importance of ensuring a 'soft landing' for producers (farming);
- production units becoming larger and more intensive (environment);
- farmers requiring extra infrastructure in place to deal with slurry/ manure volumes for expanding dairy cow numbers (environment);
- the greater burden of adjustment will be in the valuation of butterfat as EU price shows more divergence with world price than do protein values (supply chain/ livestock).
13.8 One supply chain/ livestock stakeholder explicitly supported the phased incremental approach to removing quota constraints to help minimise market disruption: "Fixed 1% annual increases over the whole period will provide a clear signal of the direction of travel".
13.9 A research/ education organisation commented that increasing quotas could pose a threat to UK farmers as this could lead to an increase in imports from other countries. However, they acknowledged that a gradual increase would be better than sudden abolition as this will allow farmers to gain an idea of what markets will be like without quotas.
13.10 A supply chain/ livestock stakeholder said that quota abolition is making the retention of export refunds untenable, meaning that there has to be a closer convergence between the EU and world markets.
Key themes to emerge in relation to milk quotas: - Just over half of those responding agreed with the proposals for milk quotas. |
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