EU milk reduction scheme fills up fast

Published 27 September 16

The maximum volume limit for the EU’s milk production reduction scheme has been almost reached in the first wave of applications. Member States applied to reduce production by a total of 1,029m litres during the first period, which will run from October-December 2016. This leaves just over 11m litres for the following reduction period(s).

Theoretically speaking, and ignoring other confounding factors, this would be a 2.9% reduction for EU-28 this October-December, compared to the same period last year. However, in reality some farms may not hit their reduction target and some may reduce deliveries even further. Clearly the trajectory of milk prices over the next few months will also have an impact, particularly on deliveries from those farms not participating in the scheme.

The UK applied for the third largest reduction volume at 109m litres, which would be a 3.0% reduction compared to October-December 2015. However, UK milk volumes are currently running much further below this, at 7.7% down for the fortnight ending 17 September. This might mean UK milk production doesn’t show a significant response to the scheme, as it seems likely that many of the farms applying may have already been cutting their production anyway.

Milk production reduction scheme applications, million litres
  Milk production Oct-Dec 2015 Reduction volume applied for Oct-Dec 2016  Theoretical % reduction
EU-28 35,722 1,029 2.9%
Germany 7,596 278 3.7%
France 6,111 176 2.9%
UK 3,581 109 3.0%
Netherlands 3,349 78 2.3%
Ireland 1,066 72 6.8%
Poland 2,566 52 2.0%

Source: European Commission, Eurostat