EU says end of milk quotas mean opportunities in Asia

BRUSSELS: European dairy farmers will be better poised to benefit from world demand for their products, particularly in Asia, when three-decade old milk quotas are lifted next week, the EU pointman on agriculture said Thursday.

But Phil Hogan, the agriculture commissioner, also told a press conference he will "remain vigilant" in case of a threat to Europe's milk producers as he acknowledged the risk of price volatility.

The quotas on cow's milk, which end on March 31, were introduced in 1984 to prevent over-production that led to "milk lakes" and "butter mountains" when farmers dumped surplus products, spurred by high prices.

Regardless of demand, EU dairy farmers have been guaranteed a price for their milk that has been much higher than on world markets, though this has been reduced in recent years.

For Hogan, a market-based approach will bring new opportunities to dairy farmers throughout the 28 nations of the European Union.

"We're going to take advantage of the opportunities that the abolition of milk quotas gives towards enhancing the potential of value-added processing which will create a lot of jobs and growth in rural areas," Hogan said.

"We have new market opportunities ... particularly in the Far East," he added.

He said Europe failed to seize these opportunities in the last 30 years while other countries like New Zealand did.

"The abolition of the quotas obviously will always raise issues about price volatility, but we continue to have market mechanisms available to us in the event of a serious crisis," he said.

He said the EU is exploring through financial instruments and in policy with member states "opportunities to confront short-term volatility" by integrating supply-chain contracts, fixed contracts, and forward contracts.

"I will continue to remain vigilant in case there is a major threat to the milk market," he said.

He said the commission has also established the Milk Market Observatory which will closely monitor the market and give the "appropriate price signals."

The commission said EU production has slowed down since the end of last year in response to signs of a slowing market.