CHINESE mothers are feeding their infants more milk-based formula. Aspiring Russians have grown addicted to decadent foreign cheeses. In most emerging markets the consumption of dairy products is growing. So it looks like the perfect time for one of the world’s biggest dairy-farming regions to throw off its shackles. Next month the European Union is due to abolish its national quotas on milk production, allowing those big dairy producers being held back by their limits—including Germany, the Netherlands, Poland, Denmark and Ireland—to expand output and seek new export markets.
The quotas were a bad idea introduced in 1984 to try to fix the ill-effects of another curdled policy. The EU’s price-intervention scheme, by which it bought farmers’ output whenever milk prices fell below a certain level, was leading to overproduction, and politically embarrassing “milk lakes” and “butter mountains”. Over the past decade or so, intervention prices were reduced, and inflation was allowed to undermine them further; since 2009 national quotas have been raised by 1% a year. At the same time, the world price for milk has risen, bringing it closer to European levels (see chart). All this means that the scrapping of quotas should not cause too much short-term disruption.
