March 18, 2016

European Milk Quotas of a Different Color

 |  By: Fran Howard

While European milk production has climbed 5% since milk quota were eliminated a year ago, some countries and companies are starting to impose their own limits, reports Wilfried Wesselink, Dairy Herd Management’s European correspondent. That’s because of the glut of dairy products on global markets and the expense of disposing of them.

In Austria, the dairy cooperative Gmundner Milch is offering both incentives and penalties for farmers who provide less or more milk than what they produced in 2015. The base price is about $13.65/cwt. But if farmers deliver 5% less than what they produced on a monthly basis in 2015, they will receive about $14/cwt. And if they produce 10% less, they’ll receive $14.65/cwt.  The penalties for producing more than 2015 production are double the incentive for producing less. So a farm producing 5% more would receive just $12.62/cwt and a farm producing 10% more would receive $11.60/cwt.

And Cremilk, a dairy company located in northern Germany, is offering a $10/cwt bonus to farms who deliver less milk and even stop delivering milk altogether or deliver it to another company.

The Dutch have taken another tack to reduce cow numbers, but it’s more related to a surplus of phosphate in dairy manure. The Dutch government will require a four to eight percent reduction in its cow herd by 2018 to limit the amount of phosphate produced. Each Dutch dairy farm’s phosphate quota will set based on the number of cow’s the farm had on July 2, 2015. The exact percentage reduction will be determined on July 1, 2017. Farms will be able to buy and sell phosphate quota, but when they do, the amount of the quota will also be reduced 10%, reports Wesselink.

In addition, a Dutch judge recently ruled that farmers can overstock freestall barns, and are not limited by law to have one freestall per cow. But an animal welfare party in the Dutch Parliament has recently requested that the Dutch Government institute a requirement of one freestall per cow.

And then there are the Russians. Because it bans dairy imports from the European Union, the United States and Australia, it has reached out to Iran for cheese. The Iranians hope to export some $500 million worth of cheese to Russia in the coming years. Russia has also announced it will subsidize its own dairy industry to the tune of nearly $400 million this year to increase milk production, up 80% over 2016.