Bittersweet end of milk quotas in Spain

With an assigned quota of 6.5 million tons and a domestic demand of 9 million tons, the sector as a whole has always said that these restrictions held back its growth. However, three years after the end of quotas, the endemic problems of the Spanish dairy sector have not been solved.

With the elimination of quotas, the increase in production has had a positive effect in the processing industry, from where there has been an increase in exports. Thus, between 2011 and 2016, the exports of Spanish cheese went from 49,779 tons to 81,120 tons (+62%). To a much lesser extent, foreign sales of yogurt and cream have increase as well.

Nevertheless that is practically the only positive outcome. The results have shown that, beyond the freedom of each farmer to be able to produce more, there are market global conditions and dominant large groups.

As for farms, its number has gone from 17,090 in 2015 to 14,424 three years later (-15%): two farms and a half less every day.

Much of the responsibility for this it is the traditional structure of the Spanish dairy sector, dominated by very small holdings, with farms scarcely viable and with an ageing population without generational replacement.

In the last three years the number of adult animals in productive age has remained practically the same at about 830,000 heads. In the mean while milk production has increased only by 5%, reaching 7 million tons in 2017.

One of the most outstanding concerns in the traditionally more producing areas was that, the end of the quotas brought about a production relocation, with a production increase in farms located closer to demand areas or to ports for the use of raw materials. That has not happened. Galicia still has half of the dairy farms (55%), followed by Asturias (12.6%) and Cantabria (8.5%). Cataluña and Andalucía continue with 3.5% each one. Something similar has happened with milk production.

Nor have prices changed. After the high prices in 2014, above 0.36 €/liter, today they are at 0.33 €/liter, still far from the European average of 0.36.

Source: El País