Countries Still Feel the Bite of EU Dairy Quota

BONN, Germany (CN) - Five European Union nations must pay a $76 million "super-levy" for milk quota violations - a system set to be abolished by 2015.

Denmark, the Netherlands, Austria, Cyprus and Luxembourg exceeded their national quotas for milk production by 200,000 tons from April 2010 through March of this year, according the European Commission's tally of the countries' own reports.

The EU's executive branch noted that the EU overall still came in 6 percent under its self-imposed total milk quota.

The EU created its quota system in the 1980s to combat overproduction of milk, as farmers were generating "milk lakes" that could not be consumed.

Since then, demand for milk products has increased, both in Europe and globally. In 2008, the EU decided to abolish the quota system, starting with a "soft landing" of increasing the total quota by 1 percent every year.

This has gradually made the system irrelevant. But "member states must still apply the rules," Agricultural Commissioner Dacian Ciolo said in a statement regarding the super-levy.

The EU has aimed to dismantle the milk quota system by 2015, as part of a liberalization trend intended, in part, to allow EU countries to make more exports.

Milk-production heavyweights such as Germany had opposed the dismantling, fearing a re-emergence of "milk lakes and butter mountains."

The 27-nation EU bloc has been including discussion of other quotas in its current debate over planned reforms to its common agricultural policy, a system of subsidies and price-support mechanisms.

As part of the reforms, it intends to refocus on farmland-conservation programs and dismantle the last remaining quota regime, for sugar, also by 2015.

Rules of the largest global trading block, the World Trade Organization, apply for EU imports and exports. The European Commission stated that in light of this, "an end to quotas is the only option" for the EU to remain competitive on commodities markets.

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