Ireland Would Suffer Most From Milk Quota Abolition
Issued 24th April 2002
The removal of the EU milk quota regime would have major consequences for Irish dairy farmers, according to an analysis by Teagasc economists.
Economists, Trevor Donnellan and Thia Hennessy of the Teagasc Rural Economy Research Centre, told an EU forum in Brussels today (Wednesday, 24th April) that the removal of the milk quota system could lead to an expansion in EU milk production in the order of 8% with a corresponding 27% reduction in the average EU milk price.
They said that the price reduction in Ireland would be even greater due to our relatively heavy dependency on intervention products and high level of production destined for export markets.
"At this lower milk price, Irish dairy farmers would have to more than double production in order to maintain income in real terms. However, the high capital cost of this expansion would push some farmers out of production," they said.
"Specifically, farms currently supplying 135,000 litres (30,000 gallons) or less, comprising about one third of producers, would not be capable of reaching this level of expansion. These farmers would have to invest up to €55,000 in order to double production. Because of their current scale, this level of investment would not be sustainable," they added.
The economists stated that even larger dairy farmers, with a current output of 450,000 litres (100,000 gallons) at present would need to increase production by at least 60% in order to maintain income in a non-quota situation. This would require investment of between €40,000 and €100,000 per farm.
