The milk quota was introduced in the 1980s in response to surplus production and acts to maintain dairy prices plummeting. The measure is crucial to famers in poorer regions of Europe who rely on the market stability the quota brings. In 2015, the European Union will abolish the milk quota, sparking concerns that the move would open the door to market instability. “After the quota, there will be a tremendous impact in market. The volatility of milk price is high already, but when the quota ends, the volatility will increase further,” Paolo de Castro, chair of the European Parliament’s agriculture committee told CNBC. But five member states including Germany and Cyprus were fined a total of 46 million euros on Tuesday for exceeding their milk quotas, casting doubts over the Commission’s hopes of calm in the dairy market after the quota rules end. Agricultural experts said that the quota could be holding back production in some countries and a boost in milk production is possible after it has ended. Removing the quota in countries that have already exceeded the cap is going to help increase the supply of milk, Professor Jeremy Franks from Newcastle University’s School of Agriculture told CNBC, adding that it is “holding back production”. The scrapping of the milk production limit comes as the Common Agricultural Policy, which provides help to farmers across the continent, undergoes sweeping reform. “Areas of higher costs and more disadvantaged places, are likely to reduce production, therefore there will be winners and loser across EU,” he told CNBC. Renwick said milk prices are likely to fall with the boost in milk production after the 2015 quota lift, but global prices will play a big role. ) “What has been happening in recent years is that EU price has been closely linked to world price. With the opening up in markets and reduced use of price support, the EU is closer to world market.” While the increased milk supply could push down prices, Renwick said price cuts may not be passed on to consumers as companies bag the extra profit.
in London. The equity benchmark jumped 0.8 percent yesterday as a senior minister in Silvio Berlusconis People of Liberty party said that lawmakers should vote for the incumbent prime minister in todays confidence vote. With no progress and two sides implacably opposed to each other, the U.S. situation is still of the utmost importance, Jeremy Batstone-Carr, head of research at Charles Stanley Group Plc in London, said in a telephone interview. It is right that the markets send a signal to lawmakers that procrastination is not an option. The U.S. government began its first partial shutdown in 17 years yesterday as Republicans and Democrats failed to agree on a compromise budget to keep the federal government open into the new financial year. As many as 800,000 federal employees didnt work and the government closed some services. Government Shutdown Further improvements in corporate confidence could be negatively impacted by the U.S. government shutdown, but it very much depends on how long the Democrat and Republican impasse will last, James Butterfill, who helps manage about $44 billion as head of global equity strategy at Coutts & Co. in London, wrote in an e-mail. U.S. politicians also need to reach a deal to increase the federal governments $16.7 trillion debt limit. Treasury Secretary Jacob J. Lew said in a letter yesterday that the U.S. will exhaust its extraordinary measures to avoid breaching the limit on Oct.