EU approves milk production increase despite German opposition
BRUSSELS, March 1_, 2008 - EU farm ministers on Monday agreed toallow European farmers to increase milk production by two percent, despiteopposition from Germany, in the face or higher demand and dairy prices. The two percent production hike would bring an extra 2.84 million tonnes ofmilk onto the market from next month, with the increased production fairlysplit between the 27 EU member states. The decision is part of a larger plan to scrap the milk subsidies,introduced in 1984 in the days when surplus production gave rise to theinfamous European butter mountains and milk lakes, by 2015. A minority of member states led by Germany, the biggest milk producer inthe bloc, opposed the move while France abstained in the decision. The European Commission pointed out that milk prices rose an average of 8.1percent in the European Union last year, although they have subsequentlyslipped back. EU Agriculture Commissioner Mariann Fischer Boel said research showed that"the market can absorb more" milk production. She described the increased purchasing power in China and India as greatopportunities for the European dairy market, not least for European cheeseswith their "excellent reputation." "If high quality EU products do not show up from the the very beginning" inthose very important markets, "it will be very difficult to came back at alater stage," she warned. Berlin stressed that milk prices had dropped sharply since their peaks lastautumn and that a production hike would encourage a larger fall in prices andrisk the livelihoods of some producers. "A production hike in the current conditions is counter-productive," GermanAgriculture Minister Horst Seehofer told reporters. Powdered milk prices are down 40 percent and those of butter down 35percent from their highs last autumn. Quota increases could therefore putfurther pressure on the most vulnerable producers, located in mountainousareas, who cannot switch to non-dairy production, the German minister argued. "I don't want to see new milk lakes and butter mountains," he said. He published a joint declaration with his French counterpart Michel Barnierstressing the need to protect the milk industry. "I can understand a very modest increase in quotas this year because thedemand is there," said Barnier. But he added: "I would warn against any decision that could havesignificant consequences in the future."