European dairy farmers fear deregulation upheaval

BELVIEW PORT, Ireland (Reuters) — An historic deregulation of Europe’s dairy sector will cost billions of euros and thousands of jobs, a string of Irish ministers have warned.

However, many farmers in other parts of the European Union were less sanguine, fearing their liberation from 30 years of milk production quotas will only expose them to a new world of competition and an increase in already sharp price volatility.

On April 1, farmers will for the first time since 1984 have no legal restrictions on the amount of milk they can produce.

The EU is hoping the reform, which is one of the biggest in a generation, will unlock vast new markets in Asia and South America. Countries in those regions are currently supplied by rivals such as New Zealand and the United States.

Plans for expansion are underway on individual farms.

Bill O’Keefe, a farmer from southeastern Ireland, said he wanted to double his herd to 320 cows in a year. His family had to pay more than US$70,000 in the 1990s to buy the quotas to increase to 160 cows from 120.

However, people working with farmers in other areas said many were waiting to see what the real impact will be, at least in the short to medium term.

“Some farmers see April 1 as liberation day, but others fear it,” said Franz Keurentjes, a board member of Dutch dairy co-operative Friesland Campina.

“The roller-coaster is coming and we will probably have to get used to that.”

Rabobank sees an increase of seven to eight percent across the EU by 2020 with the impact on prices heavily dependent on how fast the new production comes online.

“The long-term trend is upward, but the journey is going to be very, very bumpy,” said analyst Matthew Johnson.

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