Federal Department of Economic Affairs,
Education and Research EAER
Federal Office for Agriculture FOAG
Abolition of Swiss Milk Quotas
Jacques Chavaz
Deputy Director General, Federal Office for Agriculture, Bern
27 October 2013, Charmey
Contents
1. History of Swiss milk quotas
2. Swiss milk market 2005 and 2012
3. Abolition of milk quotas
4. Milk policy instruments since 1 May 2009
Abolition of Swiss Milk Quotas, 27 October 2013, Charmey
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History of Swiss milk quotas
• 1 May 1977: Implementation of milk quotas
 Goal: Stabilization of milk quanitity to maintain
the milk price on a high level
• «Agricultural policy 2002»: Introduction of
quota trading (purchase / leasing) in 1999
 Flexibilisation, reduction of costs for the milk
producers
• «Agricultural policy 2007»: Swiss Parliament decided in 2003
to abolish the milk quotas by 1 May 1999
• 1 May 2006 until 30 April 2009: transition period with the
possibility of voluntarily opting out of the milk quota system
•
1 May 2009: Definitive abolition of milk quotas
Abolition of Swiss Milk Quotas, 27 October 2013, Charmey
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Swiss milk market 2005 and 2012
2005
2012
Milk production
3.18 million tonnes
3.44 million tonnes
Milk producers
30’163
24’369
Average delivery
Dairy processing
100’761 kg milk/farm 137’800 kg milk/farm
2.0 million tonnes
2.3 million tonnes
Ø raw milk price
70.72 CHF/100kg
57.88 CHF/100kg
Cheese processing
1.2 million tonnes
1.1 million tonnes
Ø raw milk price
74.09 CHF/100kg
70.84 CHF/100kg
Source: Milchstatistik der Schweiz,
Marktbeobachtung BLW
Abolition of Swiss Milk Quotas, 27 October 2013, Charmey
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Rationale for the abolition of quotas
Rationale:
Goals:
• Increased production costs,
benefits for sellers/lessors of
quotas
• Competitivity of Swiss dairy
industry
•Linear adjustment of quotas
unusable for the real market
segmentation (PDO-Products
[GIs], innovative dairies)
• Development of structures and
specialization
• Costs for quotas
• Abolition of EU quota system:
• Free trade in cheese with the EU enough time for preparation
requires competitive production
• Export opportunities for milk
products
Abolition of Swiss Milk Quotas, 27 October 2013, Charmey
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Legal provisions (AgA)
Article 36a of the Federal Agriculture Act (AgA; SR 910.1) gave dairy
farmers and organisations the possibility of voluntarily opting out of
the milk quota system on 1 May 2006, 2007 or 2008.
State-supervised
transition period
Volume management
by organizations for
producers without
quota
90%
82%
Milk quota
system
Free market, but with
contract obligation
Free
market
100%
63% milk producers without
public milk quota
2005
06
07
08
Abolition of Swiss Milk Quotas, 27 October 2013, Charmey
09
t
10
…
15
2016
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Legal provisions (Ordinance)
• Producers who were members of a producers’
organisation (PO) or an organisation of producers and
processors PPO) could opt out of the system. Decisions of
opting out from the quota system had to be passed by at
least a 2/3 majority.
• On request, the FOAG would recognise the organisations
that opted out (statutes and volume management rules).
Responsibility of managing the volumes was then
transferred from the state to such organisations.
• Allowed volume for the organization equals sum of
individual quotas of the preceding period. Role of FOAG
was restrained to monitoring respect of global volume
allowance of each organisation..
Abolition of Swiss Milk Quotas, 27 October 2013, Charmey
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Recognized organisations
• The quota allocated to producers (including “rented” quotas) for the
previous year would be withdrawn and allocated as a basic quantity
of the organisations that opted out.
• Applications for additional volumes could be submitted. This
concerned almost exclusively export projects with expected additional
demand. Additional allowances were valid for one year.
P
P
P
P
P
P
P
P
P
P
P
Producer
Processor
P
P
P
P
P
9 Organisations of producers and
processors (PPO)
Abolition of Swiss Milk Quotas, 27 October 2013, Charmey
P
P
P
P
P
P
P
P
P
P
P P
P
P
P
P
P P
P P
P P P
P
P
P
29 Producers‘ organisations (PO)
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Conclusions of the transition period
1 May 2006 – 30 April 2009
+
• Cooperation in the value-added
chain could be improved
• Better market orientation compared
with „quota-period“
• Experience with supply/demand
management
• Mainly cheese export projects
benefited from additional milk
quantities
• Costs for milk delivery rights
decreased
Abolition of Swiss Milk Quotas, 27 October 2013, Charmey
• Too many organisations (total 39)
• Weak negotiating position of the
organisations
• Partly poor implementation of
quantity management. Less flexibility
to adapt to reducing than to
increasing demand.
• Some organisations had to pay high
charges because of non-respect of
overall allowances.
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Milk policy instruments (under public
law) from 1 May 2009 on
Border protection
Market support
Direct payments
Market monitoring
Milk quota
Contractual
obligation
Abolition of Swiss Milk Quotas, 27 October 2013, Charmey
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The Federal Council can extend self-help measures
of the inter-branch organisation to non-members of
the organisation (e.g. standard contract or
marketing levy), if
• the organisation is representative:
> 50% production and
> 60% producers/enterprises
• every branch in the inter-branch organisation accepts
the self-help measure with a large majority (minimum
2/3 of the votes)
• different regions of Switzerland are represented in
the organisation
Abolition of Swiss Milk Quotas, 27 October 2013, Charmey
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The Federal council can extend self-help
measures of the inter-branch organisation to nonmembers of the organisation (e.g. intervention
levy), if
• it is an extraordinary situation (no structural problem;
only: adjust supply to market needs)
• the extension is limited in time (max. 2 years)
The aims of the extension to non-members of the
organisation
• avoid “free riders”
• support the effectiveness of the measure
Abolition of Swiss Milk Quotas, 27 October 2013, Charmey
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Extension of BOM measures to nonmembers
• Rejected
• Levy to complement restitutions on exported
processed products
• Granted, for limited period only
• Levy for intervention fund (10/2011 – 04/2013)
• Granted, and renewable
• Standard contract with segmentation scheme
(10/2011 – 04/2013; 07/2013 – 06/2015)
Abolition of Swiss Milk Quotas, 27 October 2013, Charmey
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Standard contract (Art. 37 AgA)
Three-stage process as of 1 January 2014 :
1. Formulation of a standard contract by an interbranch organisation of the milk sector (for example
BO Milch):
 minimal requirements for duration, price and quantity
arrangements, payment arrangements
2. The Federal Council can, on request of the interbranch organisation, declare the standard contract
obligatory for all milk purchasers and sellers.
 the civil courts are competent for litigation
3. If there is no standard contract, the Federal Council
can temporarily enact regulations for the trade with
raw milk
Abolition of Swiss Milk Quotas, 27 October 2013, Charmey
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Thank you for your attention!
Abolition of Swiss Milk Quotas, 27 October 2013, Charmey
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