Today marks 100 days until milk quota abolition in Europe.
It’s hard to believe that this restrictive market control regime was introduced over 11,220 days ago. Introduced by the EEC on April 2nd 1984, the Dairy Produce Quota Regulations of 1984 were originally due to run until 1989, but have been extended many times since.
EU milk quotas have long outlived their usefulness, especially in light of the greater globalization of dairy markets in recent years, together with increased consumption of dairy products outside of Europe. In fact, per capita dairy consumption in Europe is in decline. Asian, African and Middle East markets are expected to account for two-thirds of dairy consumption demand growth between 2010 and 2020.
Milk production has been increasing at a rate of three times Ireland’s entire production every year since 2008. Milk production across the world increased by over 90 billion litres between 2008 and 2013. This is equivalent to over half of the entire EU production of 160 million litres.
The limitation of milk production expansion in Europe has helped facilitate dairy market development in other countries. According to figures presented by CLAL, the EU accounts for 24% of the world’s milk production, and 24% of world cheese, butter, SMP and WMP product exports. Even though both New Zealand and Australia account for just 5% of global milk production, the growth of milk output in these countries have stimulated export growth across the world. The Oceania region now accounts for 40% of global exports of these aforementioned products.
Recent calls in some quarters to retain some degree of supply controls demonstrate not only a lack of understanding about the global dairy market, but also a lack of leadership and vision for the future of Europe’s dairy industry.
There is no doubt that 2015 will be a difficult year within the European dairy industry. However, both Irish farmers and industry leaders need to formulate market led strategies to deliver value, rather than hope that further market supply restrictions and regulation will solve the problem. Such restrictive measures would only benefit dairy economies like the New Zealand and the USA intent on developing a greater market footprint globally.
The abolition of milk quotas will bring momentous changes, and the challenges that go with it. But, within every challenge their also exists opportunities to find new markets, to pursue new trade deals, and drive growth through innovation. Milk quotas will be a thing of the past from April 1st 2015. There will be no going back on this!