Jim Brown has written this column for 40 years this week and as he is not very well, we have resurrected his first ever article for Farmer's View. Get well soon Jim.

FOR several years, I have been an advocate of 'quotas', a word that from here onwards will be changed to 'supply management' (SM).

My reasons for this article are to try to clarify some of the misunderstandings that abound, particularly when the press coverage so far has only scratched the surface of the subject.

Let us first of all look at this milk situation on a world basis, because, whether we like it or not, we have to take into consideration what the position is outside our own shores. The truth is that milk and its associated products are in surplus everywhere, no matter where we look – in the US, Australia, New Zealand, Japan, plus the whole of Europe, and it will not be long before the Middle East is in the same position.

On the other side of the coin, we are told that one third of the world's population is starving. That might be, but they are not going to use up the surpluses as they have no money with which to buy them, so that brings us right back to the realities of life.

What do we do with the surplus dairy products that are on the market right now? We could do what Minister of Agriculture, Peter Walker has been saying ever since he took office – get out and sell the product! That is a route close to my heart.

However, new markets are hard to acquire due to the world dairy supply situation being in surplus. On a world basis, the potential for increased milk production is enormous. It is equally frightening what could be achieved in a very short space of time in both the EEC and the UK.

A sensible change in this crazy intervention system we have at the moment could be equally effective on prices. When we have reduced grain prices, which I believe are bound to materialise, it will affect milk production in two ways: a), it will mean more grain being fed to cows thus increasing milk production and b), as grain farmers see their margins dwindling a proportion will turn to livestock production with a percentage of them coming into the dairying business.

The other area that will continue to contribute to more milk production is the genetic improvement of the dairy cow. In addition, most of those who took the 'golden hand-shake' are now poised to come back in again as their five years are nearly up. This is one aspect that hurts deeply.

Having looked at the world situation, let us now come closer to home and my reasons in particular for supporting SM.

In Scotland, I am gravely concerned for my fellow farmers' future as milk producers. We have many disadvantages – our adverse climate comes high on the list compared to the southern half of the UK, and even more so with most of our EEC partners.

In 1960, Scotland had 7958 producers and today there are 3097. I want a decent standard of living for those who have stuck by the milk cow until now!

Yes, I admit that there has been improvement in margins, but I am afraid they are going to be short-lived. Soon, the EEC farm prices will be announced and increases, particularly for milk, are in no way going to cover increased costs. The only barometer as a guide to the state of our industry is bank borrowing. Since we joined the Common Market it has risen by over 500% and still increasing at an alarming rate.

If we continue with current policies, then there is only one thing that milk producers can do and that is increase output in order to try and cover our costs. In so doing, we are only aggravating matters on this tread-mill-producing more to try to stand still.

How will SM stop it? Whether one is in business, in industry, or in farming, the more progressive are always looking over the fence to see what competitors are doing. We have many pioneers in agriculture who, over the years, have become trend setters.

As an example, the most significant in recent times were the dairy farmers who changed to cubicles, loose-housing and ad-lib silage feeding. I believe the pacesetters in SM have been the Canadians, who initially modelled their milk marketing on our UK boards, followed by the addition of quotas.

I am sure that with the passing of 15 years since their inception, some changes might be necessary, but if one studies Canadian dairy farmers' standards of living from 40 cows, then it does not seem to be in much need of change.

So, how could SM apply here? My dream would be that we could have it adopted throughout the EEC on a country basis.

Once that is achieved, let us study supply management in more detail. Firstly, let me make one thing clear – SM does not necessarily mean a cut back in production on a UK basis as we are not totally self-supported in milk and it's products, but are now becoming close to that.

Let me suggest how I would apply SM to Scotland, with the same basis being used for all countries. I would take 1982 as my base year of the total milk produced. In that year, roughly 40% went for liquid consumption and 60% for manufacturing.

From the inception of SM, 40% of the milk you produce, whether it was 100 gallons or a 1000 gallons per day, would be at the liquid price and 60% would be at the average manufacturing price. Whatever was produced over the base would be paid for at the lowest price which the milk boards could procure – at the moment this is the milk to butter price, less marketing costs.

This would mean that my form of SM does not deter anyone from producing milk, but it means that you will not be getting a price that is going to encourage oversupply.

I would also only pay new entrants into milk production the bottom price until such time as there was quota available for them in the higher value market. Bringing in this system would, instantly, give all current milk producers an asset at no cost and we could introduce an exchange system whereby the quota of those going out of production could be made available to newcomers, or producers who want to expand.

Now I know that this system will not appeal to everyone. Many have condemned it, but have offered no alternative, nor are they prepared to face the facts of life which are staring us in the face.

Those in touch with grass roots producers are clearly concerned about future income if nothing is done to control over-production. The industry has, in the past, tried to control surpluses and failed.

We know that supply management has worked well in one country where producers are receiving, on average 5-6p per litre more than we are here in the UK. Can anyone tell me what other options there are that could do a better job?