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The ending of dairy quotas has dominated the political agenda for some time, and the recent weakening, of dairy markets, albeit from record highs, has made people nervous. Commissioner Hogan has been robust in his response saying that the sector is ‘not in state of crisis’ and that farmers should take their own action to reduce supply and superlevy fines.

There remain strong lobbies on both sides of the dairy industry; some looking for the butterfat reduction that ICOS has long proposed, and some looking for new methods of supply management.

The result politically, will likely end in stalemate, with the Commissioner and his DG Agriculture officials steadfastly saying that there will be no changes of any kind to the ending of the quota regime finally agreed in the 2008 CAP Health Check.

As markets weaken as we move towards peak European supply, watch for possible moves around the rules governing Private Storage Aid and Intervention, and the spreading of the superlevy bill over a number of years.

ICOS has long called for movement on workable improvements on PSA, intervention, export refunds and possibly export insurance schemes. These along with robust EU action opening new dairy markets and also putting overhang dairy commodities into food aid in crisis areas around the world.

But the idea of spreading the 2014/15 superlevy bill over a number of years at an interest free rate has gained some traction in the Commission, and there currently is a legal examination of the proposal to see does it comply with state aid and competition law in the EU.

ICOS obviously supports this initiative, but it can only form part of the solution to help farmers and their dairy co-operative businesses over what will be a difficult year for them in terms of cash flow and income.