EU Members Face €377 Million in Levies for Exceeding Milk Quotas

05 Oct 2006

05/10/06 EU Member States face paying levies totalling € 377 million for exceeding their milk production quotas in the quota year 2005/06 (April – March), according to a provisional calculation by the European Commission, based on Member States' annual declarations. Last year the total levy amounted to € 355 million. Nine Member States (Czech Republic, Germany, Spain, Italy, Cyprus, Luxembourg, Austria, Poland, and Portugal) exceeded their delivery quotas. Altogether these account for an overrun of 1 217 000 tonnes, resulting in a levy of € 376 million.

More than 90% of the levy is accounted for by 3 Member states – Italy, Poland, and Germany. However, the levy for Poland, which provisionally stands at € 91 million, is likely to be substantially reduced through the conversion of unallocated direct sales quota to delivery quota. As for direct sales to consumers, for which the total quota is 2 million tonnes, only Spain and the Netherlands reported overruns, totalling 2 600 tonnes resulting in a levy on direct sales of €0.8 million.

For the period 2005/06 the total quota for deliveries to dairies was 135.5 million tonnes. This is divided into 880 387 individual quotas for the whole of the European Union (EU-25). There is a separate quota of 2 million tonnes for direct sales to consumers, divided up into 107,000 individual quotas.

Producers in 16 Member States will not pay any levy in respect of deliveries because the national reference quantities have not been exceeded. Of the Member states with no levy for 2005/06, four Member States had incurred levies for 2004/05 (Belgium, Denmark, Ireland and Netherlands) and 7 are Member States which joined in 2004 and which have not incurred a levy since accession (Estonia, Latvia, Lithuania, Hungary, Malta, Slovenia, and Slovakia).

Cow's milk is marketed in the European Union on the basis of quotas so as to achieve a balance between supply and demand and curb surpluses. Each Member State receives two reference quantities, one for deliveries to dairies, the other for direct sales to consumers.

These quantities are broken down among producers (individual quotas) in each Member State. Where there is an overrun in the national quota, a levy is payable in the Member State concerned by the producers who have contributed to the overrun. This levy has to be paid by producers of cow's milk on all quantities of milk or milk equivalent in excess of the quota marketed during a 12-month period, which runs from 1 April to 31 March. Unused quota may be reallocated to other producers in the same Member State. Each year before 1 September, the Member States must report to the Commission on the results of the application of the milk quota scheme over the previous period. This notification must be in the form of a completed questionnaire containing all the data needed to calculate the levy. The rate of the levy is € 0.3091/kg of overrun.