Milk quota rise will have little impact in Scotland

Published on Tuesday 18 March 2008 22:04

MILK quotas are to rise by 2 per cent, but Scottish dairy producers do not expect to benefit.

The quota system is set to be phased out by 31 March 2015, but the view in Brussels is that this needs to be handled sensitively – hence the decision yesterday of a modest increase. The system was introduced in the EU three decades ago as a necessary means of controlling production. Back in the 1980s the market was plagued by lakes of milk and mountains of butter for which there was almost no sustainable market. .

Mariann Fischer Boel , the EU agricultural commissioner, said: "In the coming years demand for higher value-added dairy products will continue to rise both within Europe and across the world. We need to equip our farmers for a soft landing when quotas end in 2015."

The announcement will have little relevance in the short-term to the UK where producers have for several years failed to come close to their collective quota of 13 billion litres each year. The reality is that production is currently running at least 1.5 billion litres short as most producers struggle to make a profit.

Over the last 12 months ex-farm prices have improved by close on 30 per cent, but the painful truth is that this increase has been almost totally swallowed up by rising costs.

In structural terms Scotland is among the most efficient regions of the EU with an average herd size of around 140 cows – the EU-27 equivalent is little more than a modest 15 cows.

A spokesperson for NFU Scotland commented: "This news from Brussels was widely anticipated, but unless producers are paid significantly more for their milk it would seem that production will be little changed. Quotas are now just an irrelevance and long removed from the days when they were an asset with a considerable capital value."