Milk Quotas – Benefit or Constraint? Why a Common Agricultural Policy?

Abstract

The Common Agricultural Policy has tried to address a host of issues including security of food supply, stable prices for farmers and consumers, preservation of the environment and maintenance of links with the rest of the European economy. In 1984, the EC was forced to take steps to curtail surplus milk production which its policies had initially encouraged. Milk quotas were introduced. However, as with many CAP instruments, the outcome of policy implementation has been the opposite to that which was expected. The overall effect has been to discourage production efficiency and the development of any kind of competitive edge. The limitations of quotas are leading to industry polarization, with large producers getting larger at one end, and increasing numbers of smaller producers, unable to achieve the scale to survive, at the other. Suggests that whatever new or revised national or EC policy measures are introduced, price will ultimately control the fortunes of the dairy sector – whether or not quotas remain a tool to control supply. Concludes by asking whether the sale of milk has changed from an agricultural issue to a social one, as increasing numbers of small farmers require income support as a direct result of the quota scheme. Should quotas continue or should a completely new strategy be devised to promote an industry able to compete favourably with producers on a global scale in the future?