EUROPEAN Union farm ministers gathered yesterday in the southern Dutch town of Middelburg for three days of informal talks on the future for more than one million dairy farmers.
Diplomats said the Netherlands, which presides over EU meetings until the end of June, had pushed the issue to the top of the agenda because as a major exporter of cheese and other dairy products it wants to compete for expanding world markets.
The Dutch want to press on with a review of national production quotas and subsidised prices in preparation for the next round of World Trade Organisation (WTO) negotiations starting in 1999 and for the EU's expansion eastwards.
But most of the 15 EU member countries, led by Germany, want to extend the quota system, which is due to expire at the end of March 2000, saying it has stabilised the dairy market and helped to keep thousands of smaller farmers in poor areas in business.
Milk quotas and prices are explosive issues as shown by protests in France last week by angry farmers who blocked deliveries to hyper markets to protest against falling prices.
Italy, where milk producers earlier this year brought large parts of the country to a standstill, and Britain are pressing for increased quotas to satisfy national needs.
But the European Commission is likely to firmly resist such demands which if accepted could trigger similar calls from other EU countries and undermine the dairy market, EU officials said.
In Middelburg, Farm Commissioner Mr Franz Fischler is due to present an analysis showing that high EU dairy prices would result in further erosion of its 45 per cent world market share to cheaper New Zealand and Australian competitors.
The EU is by far the world's largest dairy producer, with an annual output of 120 million tonnes, or just over 20 per cent of world production.
Although the report makes no proposals, it signals that prices will have to be cut if the EU is to continue to export its annual stir plus of around nine million tonnes of milk despite stricter curbs on export subsidies.
