Eliminating Milk Quotas in the EU

The elimination of milk quotas in the EU member states, as of April 1st, has worried Romanian producers in the field.

România Internațional, 01.04.2015, 13:43

The Romanian producers say that in the absence of a bigger support from the authorities, many of the dairy farms and factories in this country will go bankrupt. The Romanian Agriculture Minister however says that there are no reasons for concern.

Milk quotas in the EU have been eliminated as of April 1st, so each EU country now has the right to produce as much as it wants. Romanian farmers, however, are worried about the consequences of this measure. Early this year, the Employers’ Association in the Dairy Industry (APRL) estimated that out of the 130 dairy factories in Romania, only 70 will survive by the end of 2015.

According to the association, the dairy market in Romania is worth an estimated 900 million Euros. A few days ago, the Vice-president of the Agrostar Federation, Stefan Musca, stated that after the elimination of milk quotas, many farmers would go bankrupt, as milk from abroad would be cheaper.

According to Stefan Musca, 60% of the cow farms in the country will disappear, because in the other EU countries subsidies in the sector are much higher and they are paid on time. The Romanian Agriculture Minister Daniel Constantin has assured farmers that they have no reasons to worry, because, according to estimates, the production of milk will only increase by 1% at EU level, therefore the risk of Romania having to import cheaper milk from other countries is extremely low. He has stated that the issue facing the Romanian dairy market today is the drop in consumption, because prices are too high.

Minister Constantin hopes that the reduction of the VAT on foodstuffs, including milk, from 24% as it is today to 9% starting June, will have positive effects. A lower VAT is aimed at boosting consumption and maybe that will also lead to lower production costs, Constantin has also said, adding that the process of collecting milk from producers needs to be improved as well.

In another move, the Romanian Agency for Payments and Intervention in Agriculture has announced that, as of April 1st, along with the elimination of milk quotas in the EU, new regulations have appeared regarding producers and buyers in the sector. Under the new provisions, any milk delivery on Romanian soil can only be done on the basis of a contract concluded between the parties, valid for at least 6 months.

Any delivery outside the terms of the contract shall be legally sanctioned. For the 2014-2015 milk quotas, the Romanian farmers must submit, until May 14th 2015, annual statements regarding direct sales or deliveries of milk. As of May 1st, businesses shall declare by the 15th of each month the quantity of milk bought from producers the previous month.

The Agency has recommended Romanian producers to establish their own professional organizations, in order to be able to make it on the market and to increase their advantage when negotiating with first-buyers. For them to become known, producers’ organizations must submit an application, accompanied by substantiating annexes, to the county branches of the Agency for Payments and Intervention in Agriculture.