European ministers of agriculture and the European Union (EU) agricultural commissioner agreed this week to eliminate milk quotas in Europe on April 1, 2015.
To prepare dairy farmers for the free market, milk quotas will increase 1% per year starting on April 1, 2009. The policy toward quota elimination will be reviewed in 2010 and 2012.
Because the fat correction factor of the milk quota will also change, farmers that produce milk with higher percentage of butter fat will be allowed to produce a little extra milk as well. Dutch farmers will be able to produce 2.5% more milk in 2009/2010. Belgium producers will be able to produce 3.2% extra; Denmark, 2.4%, Germany, 1.3%. And as a compromise, Italy received permission to produce 5% more.
Not all EU farmers agree with the expansion, and eventual elimination, of the milk quota. German farmers, in particular, complain there is already a milk surplus which has led to current low prices. Further expansion of milk production will likely lower milk prices even further, they say. They also note 4,600 dairy farms went out of business in Germany last year, decreasing farm numbers to 101,000.
October prices for German industrial milk was about $13.75/cwt, which is half of what it was in August 2007 and the lowest price in 10 years. Nevertheless, German milk quota values have jumped 7% to 20%, depending on the region of the country, as farmers scramble to increase production and efficiency.