2 February 1996

Government:Market forces policy

THE UK government wants quotas abolished. It sees the EU dairy regime as too costly and says quotas are a barrier to development.

It maintains that it is absurd to operate a price support system that encourages excessive production while at the same time imposing quotas to offset this.

MAFF officials recently told the Commons agriculture select committee that the governments aim was to remove dairy price support and production quotas altogether, thus exposing the industry to market forces.

But it does recognise that compensation for loss of support may be needed. In the short term, government wants gradual reductions in price support, but stresses it will fight to avoid any quota cuts.

MAFF has rejected both the two-tier quota system and the headage payment scheme. A and B quota would be extremely difficult and expensive to monitor, and when some countries already struggle to administer the existing system, adding more bureaucracy could result in massive fraud.

And the government will not support a headage scheme because it would disadvantage larger scale producers, many of whom are in the UK.