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Italy Secures Extra Milk Quota of 620,000 Tonnes from EU

Source: USDA

Feb 6 - Italian Minister of Agriculture Luca Zaia has obtained an additional 620,000 tons in milk production from the EU Agriculture Council of Ministers, which will result in increased production revenues and minimal overproduction fines.

Italy has managed to secure the entire 5-percent increase in its milk production effective April 2009, while the same increase will be introduced over a 5-year period for all other Member States.   The increased quota will allow Italian producers to absorb the productive surplus, minimize future levies, and increase milk production worth 240 million Euros annually.
Italy and the Milk Quotas

Italian Minister of Agriculture Luca Zaia has been able to do what many Ministers before him have not – finally obtain an increase in Italy’s milk quotas from the EU Agriculture Council of Ministers.  It has taken Italy 25 years, but thanks to Zaia’s tough negotiation with EU Commissioner Mariann Fischer Boel, Italian dairy farmers will now have an additional 620,000 tons of milk production, which mean increased revenues and lower overproduction fines.  (The agreement also states a modification of the method to calculate the fat content in the quota.)

On 30 January 2009 Minister Zaia presented a special decree to the Italian Council of Ministers, which made the EU decision to increase Italy’s milk production official and outlined the Ministry of Agriculture’s distribution of the increased quotas. 

Historically, Italy has exceeded its assigned milk quotas due to the fact that the quotas were assigned in 1983 based on official production figures, which farmers significantly under-reported.  Industry sources indicate that the milk quotas did very little to stop this “black milk” economy until the issue was finally re-examined and a quasi-amnesty was agreed upon with minor revisions in the 1999 and 2003 reforms.  Italy, however, still overproduces five to six percent more than its assigned quota, which has led to heavy EU fines.  For example, for 2007-2008, the Italian government was fined 160 million Euros for exceeding its milk quota.

Italy’s entire 5-percent increase in its milk production quota will be effective April 2009, while the 5-percent increase for other Member States will be introduced over the next five years.  The increased quota will allow Italian producers to absorb the productive surplus, minimize future overproduction fines, and increase milk production worth 240 million Euros annually. Industry sources also speculate that the EU decision to grant Italy the five-percent milk quota increase up front is aimed more at reducing the super levy bill than providing Italy an incentive to produce more milk.

Minister Zaia plans to distribute the additional milk quotas to those Italian producers who have followed production rules and, according to Italian law 119/2003, will give priority to those companies that have been hit hardest by the overproduction penalties.

In Italy, more than 8,404 dairy companies have been affected by the milk quotas, of which only 4.264 are still in business.  1,500 companies still have unpaid over production fines, totaling 1.85 billion Euros.

Reaction from Italian Trade and Industry

The Italian Milk Association (Assolatte) has welcomed the news of the CAP Health Check and the increased milk quotas, adding that Italy can “finally produce without being fined.  For us this is not an increase but rather the end of a clear discrimination that condemned us for years to pay fines in order not to further increase the dependency from foreign countries.”

The two largest Italian Farmers Associations, Coldiretti and Confagricoltura also welcome the increased quota by saying, “After the setbacks endured by Italy in the wine, fruit, and vegetable reforms of last year, Italy has once again become a key player with EU negotiations.”  The farmers associations believe that the milk quota assigned to Italy will allow a more equitable

The Italian Breeder Association has also voiced their opinion by saying that the milk quotas have severely affected their industry forcing them to pay fines for years.  “It will take 30 to 40 years to heal the sector’s wound--a wound that involves two generations of breeders, of which many stables have not survived.”

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