Milk quotas and matters arising

On April 1st the BBC reported that milk quotas were being abolished “so (that) EU dairy business can compete with international rivals in supplying growing markets in Asia and Africa”.

It is not immediately clear why a system to match production to demand should be an obstacle to exports.  Quotas were introduced in 1984 when the EU was struggling with “mountains” of skimmed milk powder and butter.  The figures appear to show that quotas contained this problem, which was giving the Common Agricultural Policy a bad name and leading to “give away” exports which damaged farming in poorer parts of the world.  So why the change of policy?

What quotas alone have not been enough to do is to maintain farm-gate prices at a reasonable level or stop the slide in the number of dairy farms.  As often happens in modern farming technological changes have raised yields but at the same time raised issues about environmental, sustainability or animal welfare issues.  These technological changes have enabled overall production to be maintained in the face of the power structure within the supply chain.  Retailers see nothing peculiar about selling milk for less than bottled water.  It is noteworthy that they tend to treat bananas and milk in the same way; both of them products that people seem bound to buy used as levers to draw customers in.  In both cases political battles have been, and, are being fought over the way in which they are marketed and traded.  Corporate power and current ideology favour “free” markets.

At the individual level, farmers can often only respond to price falls by producing more, which causes further price falls; and this explains the “so that” in the report.  The “dairy businesses” which of course are not farms, but corporate players, hope that milk within the EU will become even cheaper, doing great damage to farming in the EU and probably in Asia and Africa also.

The parallel processes affecting bananas have progressed further than in the case of milk.  It seems that the only reason why farmers in the Caribbean are still able to grow bananas is because they have embraced Fair Trade, which enables an escape into a more real world.  What are the possible avenues of escape for European dairy farmers?

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