"Milk quotas have played an important role in the past in keeping supply and demand in balance," said Mariann Fischer Boel, Commissioner for Agriculture and Rural Development. "But since the CAP reforms came into effect, farmers are free to produce for the market and quotas are increasingly an anachronism. Quotas will disappear from 2015. The question we now have to ask is: what sort of transitional arrangements do we need? That will be a key topic in the upcoming CAP 'Health Check'."
For the 2006/07 season (April 2006-March 2007), the total quota for deliveries to dairies was 137 million tonnes. The quota is divided into 808 162 individual quotas for the whole of the European Union (EU-25 - The quota system was only implemented in Romania and Bulgaria from the 1st April 2007). There is a separate quota of 2 million tonnes for direct sales to consumers which is divided into 73 000 individual quotas.
The total levy to be paid is substantially (38%) lower in 2006/07 than in 2005/06 despite total adjusted deliveries decreasing by only 0.15%. This is because the total delivery quota was 1.2 million tonnes higher and the levy per kg of excess is 8% lower than in the previous year. Actual deliveries increased very slightly relative to 2005/06, but this was more than off set by a decrease in their average fat content (from 4.05% to 4.03%) thereby resulting in reduced deliveries after adjustment for fat content.
Producers in 18 of the EU 25 will not pay any levy in respect of deliveries because the national reference quantities have not been exceeded. Deliveries in 9 countries were at least 5% below quota (Greece, Sweden, Slovakia, Slovenia, Estonia, Latvia, Lithuania, Malta and Hungary). However, in terms of the absolute amount of unused quota, France with 636,000 unused tonnes and the UK with 479,000 unused tonnes had the most significant under supply. The total unused deliveries quota in the 18 Member States which did not use all their quota amounts to 2.7 million tonnes. This means that, with the overruns in the other seven MS, the total milk deliveries in the EU 25 is actually 1.9 million tonnes under the total available quota.
How the system works
Cow's milk is marketed in the European Union on the basis of quotas so as to achieve a balance between supply and demand and curb surpluses. Each Member State receives two reference quantities ("quotas"), one for deliveries to dairies, the other for direct sales to consumers.
These quantities are broken down among producers (individual quotas) in each Member State. Where there is an overrun in the national quota, a levy is payable in the Member State concerned by the producers who have contributed to the overrun. This levy has to be paid by producers of cow's milk on all quantities of milk or milk equivalent in excess of the quota marketed during a 12-month period, which runs from 1 April to 31 March. Each year before 1 September, the Member States must report to the Commission on the results of the application of the milk quota scheme over the previous period. This notification must be in the form of a completed questionnaire containing all the data needed to calculate the levy. The rate of the levy is € 28.54/100kg of overrun.
