The end of quotas: A butter future for EU dairy farmers?

PARIS, Dec 14 (AFP): Thirty years after introducing quotas to combat the butter mountain caused by overproduction, the EU is on the cusp of freeing up the dairy sector amid growing global demand for milk products.

To see it doesn't all go sour for producers, Euronext recently announced plans to create futures contracts for several products to help them manage market fluctuations.

Despite introducing the quotas in 1984 to grapple with chronic overproduction, the EU remains the world's top dairy producer and number two exporter.

Those caps will end on March 31, allowing Europe to tap into growing demand for milk products in emerging markets, in particular in China.

But dairy farmers are worried a quick boom in production could dampen prices and curdle their finances.

Enter Euronext, which said last month it aims, pending regulatory approval, to introduce futures and options contracts for butter, nonfat powdered milk and powdered whey for periods of three or six months or even longer.

Futures contracts are an agreement to deliver standardised goods at a future date at the price agreed upon on the contract. An options contract can be to buy or sell products at a set price on a set date.