Quotas were put on milk to reduce the problem of over supply. However the problem with this was that it is difficult to control the fertility of cows so the supply of milk under or over shot the quotas. This caused a lot of hardship for farmers, who had often to through milk away.
Milk quotas were due to end in 2000 but they will continue until at least 2008. However the quota has been reduced by 2.4% and min price for milk reduced by15%
- Set Asides.
This involves encouraging or giving financial incentives to farmers to take land out of use. This has the following advantages
- Reduces Excess supply
- Is good for world farmers and trade negotiations
- Reduces the cost of buying surpluses for the EU
- Better for the environment.
- Is still costly for the EU to pay farmers to produce nothing
- Is an inefficient allocation of resources
- Farmers tend to choose the least fertile land to take out of use.
- MacSharry Reforms
- AN Extension of the Set Aside programme. To qualify for income support farmers have to agree to set aside 15% of their land
- (Farmers were given subsidies equal to the price reduction * by the average yield* the amount of hectares )
- Reducing the Target Price for Cereals by 29% and giving farmers instead direct income support
- Incentives given to farmers who switched to less intensive farming methods
Agenda 2000 (Fischler Reforms):
- Cereal prices again reduced by 15%. This fall in cereal prices will also reduce the price of livestock feeding costs
- 20% cut in intervention price of beef, with farmers compensated per number of cattle
- To compensate for the falling prices in cereals and livestock farmers are to be given direct income support payments.
- On environmental grounds these subsidies are to be per hectare rather than per animal to discourage intensive farming.
- New rural and environmental policy. This gives grants for rural investment, environmentally friendly products (organic) and diversification into tourism