MEP James Nicholson answers questions about the future of dairy producers in a Europe with a potentially limitless supply of milk.

End of milk quotas: Concerns of the dairy sector

https://api.multimedia.europarl.europa.eu/documents/20125/11926747/n004-0023-enx.srt

Milk quotas will come to an end  on 31 March 2015.

30 years of restrictions on milk production  give way to the laws of demand and supply.

Dairy producers  have a great many questions.

What about price volatility,  the end of financial aids

and the reorganisation of the supply chain?

the man the European Parliament has put  in charge of paving the way for this

and taking stock of the measures  that are already in place.

So, the first question we received  is this one.

The milk package is implemented differently  and at a different pace in the EU states.

We, the dairy industry, the dairy farmers  and the processing industry

will adapt to the new situation  and will do so successfully

I think the truth is  nobody can guarantee stability.

When I did the dairy package in 2012,  which is about three years ago,

I made it very clear then that  if there was not maximum cooperation

between the producers on the one hand  and the processors on the other,

And it's fair to say that  there has not been that trust

between the producers and the processors,

and they have not taken the time  to build up that trust.

I think for the dairy industry,  their future in the long-term will be good,

but they're facing,  at this moment of time...

I think the Commission are wrong  to try to say there is no problem.

There is a problem and we have got  to do more to solve that problem.

There is a question coming from a  gentleman you probably know very well.

Here it is.  -I know him very well indeed.

What EU measures would you suggest  to better control increased volatility

after the elimination of the dairy quotas?

And in particular, do you think that  an increase in the safety net price

to better reflect the higher production cost

would alleviate the problems that  European dairy farmers are facing?

I do believe the Commission  have been wrong in dragging their feet,

in putting their proper intervention price  at the bottom of the market.

and what came through very clearly  at the hearing is that even if the safety net,

or the intervention price was increased  from where it is at 18 pence or 18 cents,

to 22-23 cents, which would be  closer to the cost of production,

there would be a big rush  to put milk into intervention,

but it would create confidence and it would  say to the market, 'we are behind you'.

Today, fewer than 1,400 producers supply  the milk for the Cantal PDO cheese.

is a real opportunity for creating more value  for the milk. Unfortunately it's not working.

Today, 80% of this milk  is processed by Sodiaal or Lactalis.

The EU says it will allow regulation  of milk production volumes.

How can we, the small producers, force  these structures to regulate the volume

rather than producing in industrial quantities  and undercutting cheese prices.

I've been to these regions and I've seen  the problems that the people there face.

During the dairy package we did put in  safeguards for PDO and PGI areas,

and that seems to have worked pretty well  in parts of Italy and in parts of France.

And that was intended specifically to protect  those areas producing specialised cheeses

and no-one has told me  that has not worked.

I did a conference recently for other MEPs  from the Tirol area in Austria

where you have many farmers  producing in mountainous areas

and there is no doubt that they are going to  come under major pressure to survive.

National governments must have  the flexibility, in my opinion,

to use the pillar II funds, and some are.

Could you explain  what the second pillar means?

Well the second pillar is the area  by which they can inject,

the national government  can convert part of the first pillar

to the second pillar  to give direct support.

It's a social problem as well.  And this is one:

My belief is no, we don't, because  they're providing a fantastic contribution

to our environment, to our mountains,  to the regions that they live in.

Back to the costs. Another question,  coming from Germany.

The European dairy farmers  are faced with a set of new conditions...

On the other hand, milk quotas will end,

so that around one billion euros  from the super levy

will go into the EU's agricultural budget -

money that the dairy farmers  need for their investments.

that the billion euros from the super levy  will flow back to the dairy farmers?

Very good question.  There's much disagreement over that.

The super levy money as is collected must  be used directly to develop the dairy sector.

I would be sympathetic to that,  I would be supportive of that,

because I know only too well that the  Commission made a vast amount of profit

the last time they bought milk into  intervention at 18p and sold at 28p.

And none of that money came back into  agriculture, never mind the dairy sector.

James Nicholson, thanks a lot and we'll  meet again next year to see how it worked.