Last week negotiators from the European Union rejected a proposed dairy supply management policy in an agreement to reform the Common Agricultural Policy (CAP). The CAP is similar to the U.S. Farm Bill in that it sets the overall agricultural and rural development policy of the European Union. Earlier this year the EU parliament had considered a proposal that would link EU farm aid to reductions in milk production, similar in some respects to the milk supply management proposal that is in the Dairy Security Act. Last month, the House of Representatives rejected dairy supply management, called the Dairy Market Stabilization Program, by a vote of 291-135. (The Senate version of the Farm Bill still includes a supply management provision.)
“In a world of growth opportunities, seeking to address price volatility by reducing productive capacity is self-defeating,” said Dairy UK Director General Jim Begg. The European National Farmers Union’s George Jamieson said the new milk supply limits in the CAP would leave the door wide open to competitors such as New Zealand looking to capitalize on emerging markets.
The CAP was started in 1962 and recent reforms have moved the CAP away from production-oriented policies, such as milk production quotas, which are due to expire by April 2015. CAP proposals are decided on by the Council of Agriculture Ministers of the 27 EU countries, together with the European Parliament.
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