No quota on niche milk

6 March 1998

No quota on niche milk

DAIRY farmers should be allowed to shake off quota restrictions and produce more milk for use in exportable processed foods and other outlets.

That will give processors access to growing world markets which would otherwise be grabbed by competitors, said Philippe Jachnik of ATLA, the French equivalent of the Dairy Industry Federation.

"There is a growing feeling that quotas will be removed by 2006. The system may prove unenforceable in the new states that have applied to join the EC at that time. But to do away with quotas overnight is impractical."

A gradual removal would allow farmers to manage quota accordingly. "It is crucial. Farmers have to calculate their return on investment. At the moment they have no idea what is happening."

Allowing farmers to produce more milk would reduce production costs. A gradual scaling back of super-levy payments for those who increased output would enable them to sell extra milk at a lower price and still maintain profit.

For the system to succeed, EC countries needed access to growing world markets. Mr Jachniks proposals could run foul of GATT restrictions on subsidised exports – but no-one yet knew.

Help was around the corner. The USA had accused Canada of introducing differentiated payments for milk, much of which was destined for exportable products.

A ruling by a WTO panel was expected next spring, which would lay down ground rules for potential EU discussions, said Mr Jachnik.