Agriculture and rural development

A short history of milk quotas

A short history of milk quotas

The end of milk quotas
A short history of milk quotas

1970s and 1980s

The system of guaranteed prices at a level well above world market prices leads to a structural surplus, with the European Commission obliged to buy in large volume of butter and Skimmed Milk Powder into public intervention. On occasions these "mountains" exceeded 1 million tonnes for both SMP and butter.

1983

European Commission proposes the introduction of milk quotas. Rules agreed by EU Agriculture Ministers in March 1984.

1984 (April)

Milk quotas enter into force.

CAP reform

Successive policy reform exercises  (in 1992, 1999, 2003) see a reduction in the system of guaranteed prices, and in return farmers were paid a Direct Payment in order to stabilise revenues.

Most of these payments were then "decoupled" from production – further enhancing the market orientation of EU agriculture.

For the dairy sector, following the reduction in the guaranteed price from 2003, producer prices picked up and have developed positively, with fluctuations.

Other CAP tools, such as payments for less favoured areas, are aimed at providing additional support for vulnerable regions.

At the same time, Rural Development Programmes have provided options to individual farmers to apply for additional funding. For example, 1.4 billion EUR of EU funds from 2007-2013  stimulated more than 10 bn EUR of  Farm Modernisation Investments in the dairy sector from 2007-2013.

2003

CAP "Mid Term Review" deal agrees that milk quotas should be abolished in 2015.

2008

CAP "Health Check" confirms that milk quotas will expire end of March 2015, and agrees gradual increase in quotas for 5 years.

2012

Council and EP agreement on Milk Package - a policy response to the 2009 dairy market crisis - including new rules on contracts and improving collective bargaining for producers.

2013

CAP Reform agreement includes substantial changes to Direct Payments system, including options for Voluntary Coupled Support.

September 2013

At Conference on EU dairy sector after 2015, Commission announces EU Milk Market Observatory aimed at increasing market transparency.

31 March 2015

End of quotas

 

 

Further information

 

The first report on the phasing-out of milk quotas (2010)

In December 2010 the Commission has also adopted a separate report on the dairy market situation and the consequent conditions for smoothly phasing out the milk quota system. With only 3 Member States (DK, NL, CY) having produced more than their quota in 2009/2010 and milk quota prices now having a very low value, already zero in some Member States, the report concludes that soft landing is on track in an overwhelming majority of Member States.

Under these circumstances, it concludes that there is no reason to revisit the Health Check decisions with regard to the gradual increase in quotas and the end of the quota regime on 1 April 2015.

To further pave the way towards quota abolition, the Commission raises for consideration the organisation of meetings gathering experts of the Management Committee for the single CMO with the Advisory Group on Milk in order to assess market developments and prospects.

 

>> Read the report

The second report on the phasing-out of milk quotas (2012)

In December 2012 the Commission adopted its second report on the evolution of the market situation and conditions for a smooth phasing out of the milk quota system, as requested by the Council as part of the 2008 CAP Health Check.

The report, which has been forwarded to the Council and the European Parliament, concludes that the "soft landing" is on track: in the vast majority of Member States, quotas are no longer relevant to limiting production and the quota price (paid by farmers seeking additional quota) is already zero or close to zero.

 

>> More info on the report

>> Read the report