Italy fights its corner in ongoing battle over Union dairy market

Date: 13/02/1997

By Michael Mann

ITALY'S failure, once again, to respect its milk production quota has set the scene for what promises to be a protracted battle over the future of the EU's dairy market.

Even before the European Commission has completed its promised reports on the sector, milk will feature heavily on the agenda of next week's meeting of farm ministers, when Italy's Michele Pinto will table his initial thoughts on future reform.

Agriculture Commissioner Franz Fischler must come up with a system to replace the current quota arrangements which expire in March 2000.

But his room for manoeuvre will be severely limited by unhappiness in a number of countries - not least Italy and the UK - that their current quotas come nowhere near fulfilling their domestic needs.

Italy complains that it is no more than 65&percent; self-sufficient in milk, while other countries produce up to 30&percent; more than they require.

This, argues Rome, means that much of what is produced elsewhere ends up being bought into public storage with cash from Union coffers.

Most of the smart money has already come down against an eventual agreement to cut quotas.

But opponents of any increase in Italy's production limit argue that rewarding a country which has failed to obey a basic regulation well over a decade after it came into force would hardly send a good political signal.

In a lengthy paper, Pinto calls for the “realignment of Community prices on international prices”, with aid payments to farmers to buffer them from the effects of the changes.

Alternatively, a quota system could be maintained, but with “significant amendments” to give a “balanced distribution of quotas among all member states” - a clear demand for a higher quota for Italy.

Meanwhile, a UK document drawn up last year rather optimistically proposes a 30&percent; cut in EU prices over five years. It also calls for the maintenance of quotas, which would become transferable across borders.

Neither British nor Italian officials are holding out high hopes for rapid progress, but it is clear that whatever approach the Commission eventually favours will be hampered by contradictory demands from different Union governments.

“France and the Netherlands still feel pulled in different directions. The Germans want to maintain prices and quotas as they are, while the Danes want EU prices to come down to allow them to compete on the world market without subsidies,” said a member state official.