Over the coming years, dairy farmers will, rightly, question the wisdom of paying high prices for milk quota. The last exchange, adjudicated last month, returned quota prices of between 10 and 40c/l – down on the previous exchange, but still quite high in some of the Munster co-ops.
However, since then, the Council of EU Agriculture Ministers has decided the dairy elements of the Health Check. They will deliver a quota increase of 1% per annum for the 5 years from 2009 to 2013, plus the equivalent of an extra 2% quota from the reduction in the butterfat adjustment. Also, the fact that milk quotas will lapse in 2015 was confirmed beyond doubt by the Council decision not to extend the regime past that date.
With end-October national milk supplies 3.3% below quota (taking account of the 2% on 1st April last) and the prospect of another 3% equivalent of additional quota from 1st April 09, some dairy farmers might even be tempted to take a gamble and decide against purchasing extra quota altogether – this is not to be recommended, but nor is spending too much money on a license to produce, the value of which can now only fall rapidly.