EU Says Dairy Prospects Favorable as Bloc Phases Out Quotas

European dairy market prospects are favorable in the medium and long term as the bloc moves to phase out production quotas, the European Commission said.

In the majority of the European Union’s 27 member countries, quotas are “no longer relevant to limiting production” and prices paid by farmers seeking to exceed quotas are already at or near zero, the commission, the bloc’s executive arm, said in a report on its website. Population growth and increasingly westernized diets in emerging markets, which often include more protein products, may be supportive for the industry, the EU said.

Prices will “trend towards higher levels with some ups and downs along the curve,” the EU said. “The current difficulties endured by dairy farmers in certain areas more severely hit by the hike in the price of feedstuffs do not hide the overall positive picture of the sector.”

Since 2009, EU milk production caps have been increasing by 1 percent annually, with the goal of phasing out quotas altogether by 2015.

To contact the reporter on this story: Whitney McFerron in London at wmcferron1@bloomberg.net

To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net