Milk quota

A milk quota (or more accurately dairy produce quota) was one of the measures used by governments in the European Union to intervene in agriculture. Their purpose was to bring rising milk production under control. Milk quotas were attached to land holdings, and they represented a cap on the amount of milk that a farmer could sell every year without paying a levy. Milk quotas were assets; they could be bought and sold, or acquired or lost by other means, and there was a market for them.

Milk quotas were withdrawn on 31 March 2015. Milk quota holders in the UK might be able to mitigate capital gains tax as a result of the trading losses arising.

Milk quotas were first introduced on 2 April 1984 under the Dairy Produce Quota Regulations 1984, which reflected the then European Economic Community (now the European Community)'s Common Agricultural Policy. Originally they were to run until 1989, but they have been extended several times, and now will endure until at least 31 March 2015.

Each member of the European Economic Community was allowed to produce dairy products up to a cap, which was based on each state's 1981 production, plus 1%. The cap was designated the "reference quantity". A levy to the EEC was due on production in excess of the reference quantity. This levy was then to be recovered from the farmers or dairies involved. Until 2002, recovery of the levy was down to the Intervention Board for England and Wales. It was then recovered by the Rural Payments Agency on behalf of DEFRA (the Department of Environment, Food and Rural Affairs).

The Dairy Produce (Quotas) Regulations 1994, which came into effect from 1 April 1994, substantially revised the old structure. Until 31 March 1994, the MAFF ("Ministry of Agriculture, Fisheries and Food", a British government department that has since been replaced by DEFRA) was responsible for milk quotas. On the MAFF's behalf, Milk Marketing Boards kept a register of quotas that detailed which farmers or dairies held what quotas. The Milk Marketing Boards were dissolved on 31 October 1994 (in England, Wales and Scotland) and 28 February 1995 (in Northern Ireland).

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