§ The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Elliot Morley)The ruling of the European Court of Justice in the Thomsen case has important implications for UK dairy farmers. It means that quota holders who do not produce against their quota for one year will have it confiscated to the national reserve. In effect, non-producing milk quota holders (NPQHs) will no longer be able to hold quota. Leasing out of quota will not be enough to avoid confiscation.
There has understandably been considerable interest in the timetable for implementation of the ruling in the UK. I can confirm that the new rules will apply from 1 April 2004. Accordingly, NPQHs who have not produced against their quota in 2003–04 will be allowed until 31 March 2004 to sell it. If they do not do so by that 10WS date, it will be confiscated to the national reserve. During the 2003–04 quota year NPQHs may lease out quota if they so wish.
Currently, NPQHs who lose their quota may apply for its restoration within 6 years of confiscation if they resume active production. However, under current EC proposals this period may be reduced to two years.
In association with this, we shall be going out to consultation later in the year on the possible introduction of a 70 per cent usage rule. Under such a rule producers who do not use at least 70 per cent of their quota over a period to be fixed would have all or part of the unused portion confiscated to the national reserve. The introduction of such a rule would depend on the outcome of the consultation exercise. Subject to final confirmation of the legal base, we also propose to consult on breaking the link between quota and land, which will make it easier for tenants to buy in their own right any quota released by NPQHs.
We recognise that the change concerning NPQHs is an important one and have publicised the new rules widely, including sending individual letters to all NPQHs. We believe that we have put in place a fair transitional arrangement that both allows NPQHs a reasonable period of time to adjust to the new circumstances and also recognises the UK's obligations under Community law.