It has been announced that the European Commission has proposed to increase milk quotas by 2% across all states from 1 April 2008. The increase would be applied on a flat basis between all member states and would equate to an extra 2.84 million tonnes. The increase comes as part of a report by the EU Commission which states that between 2007 and 2014 - 8 million tonnes of extra milk will be required to meet internal demand. From a UK perspective, the new changes would mean that quota would be approximately 14,557 million litres for the 2008/09 milk year (note - there is an additional 0.5% increase as part of previous legislation).

In context
Although the Commission expects that the quota increase would be taken up, it is aware that the impact on production may be limited as individual countries will be different. In addition, although the report suggests that there is sufficient internal demand, some commentators suggest that extra milk would be funneled into extra commodity products that would be traded on world markets. This could cause some negative pressure on prices.