Whilst nothing is certain until the final proposals are adopted EU Agriculture Ministers by the end of 2008 it is very probable that quotas will be increased steadily until the end of the quota regime in 2015 thus offering a ‘soft landing’ into a more market orientated industry.

 

The recently published Commission communication which sets out areas for consultation and debate before the CAP Health check next year concludes that the reasons for which milk quotas were introduced are no longer valid. Rather than coping with stagnating demand and growing supply the reverse now applies thus making quotas an unnecessary restriction. The role of intervention has almost disappeared.

 

The current milk quota system is programmed to be phased out by the end of the 2014/15 milk year and the Commission’s paper asks if a gradual increase in quotas should be phased in to enable a managed ‘soft landing’. The Commission will present a detailed report by the end of 2007 focussed on the sector and its proposals.

 

Looking at the practical implications on the quota market in the UK, it is looking increasingly improbable that quotas will be an issue from henceforth. A further increase of 0.5% will be implemented as part of the 2003 reform next year adding a further 70ml on to the national quota which will take it up to more than 14,272ml, some 242ml more than the butterfat adjusted production achieved in the 1994/95 milk year and in excess of 600ml more than last year’s final output.

 

Current levels of trade reflect the perceived need for quota in the UK – the market is very quiet with prices now less than 2ppl.