Italy's dairy sector will survive the ending of European Union milk production limits in 2015, agriculture minister Mario Catania told Reuters. "Prices will be lower and force us to be more competitive," Catania said in an interview on Saturday. "But the system will hold up."
While the agro-food industry contributes more than 15 percent to the euro zone's third-biggest economy, an opaque distribution chain and a fragmented farmer community have dragged on growth in the sector. The planned lifting of EU milk quotas in 2015 has stoked fears the domestic market will be inundated by cheaper milk from bigger producers such as France and Germany.
"I am confident. The lifting of the quotas will bring a rationalisation of our system and an economy of scale. So, the final impact will not be devastating," Catania said at a conference held by industry body Coldiretti. Italy produced around 10.6 million tonnes of milk last year, compared with 24 million in France and 28.8 million in Germany. Italian milk supplies 57 percent of national demand, leaving room for imports which are mainly used for non-certified products such as yoghurt and long-life milk.
The technocrat government headed by former EU commissioner Mario Monti has recently approved a so-called "milk package" allowing farmers and producers to negotiate contract terms collectively. The move follows a market-focused approach the European Commission - the EU's executive arm - has taken over recent years to allow a soft landing in the dairy sector ahead of the end of milk quotas introduced in 1984 to stabilise the sector.
Monti said at the conference on Saturday he would keep the agricultural sector as a government priority when it discusses the new EU farm policy. The EC presented proposals at the end of last year to reform the bloc's 55 billion euros ($72 billion) per year common agricultural policy (CAP) for 2014-20, which must be jointly approved by EU governments and lawmakers.