IF THE European Commission is right, the milk supply reduction scheme of last year was a big success.

Over the final quarter of 2016, around 48,000 farmers took 861,000 tonnes out of production, compared to the previous year. This coincided with an improvement in milk prices, which was welcome after a grim year.

On that basis, the Commission is hailing its scheme a success, with the relatively modest cost of €150 million making it good value for money. According to the Milk Market Observatory, milk prices are now around a third better than a year ago across the EU, with the gains in the UK boosted by the post-Brexit referendum weakening of sterling.

This has to be good news, and the Commission is patting itself on the back for delivering a better milk price. This is ironic, since the farm commissioner, Phil Hogan, was a very reluctant convert to the milk supply reduction programme. This was on the basis that poor prices were already driving down production, meaning that all the supply reduction programme did was reward farmers financially for decisions already taken.

That is probably true, but this is a situation where the end was worth having, regardless of the means. In terms of the statistics, the scheme was taken up fairly widely across the EU, and the average reduction was a modest 18 tonnes per applicant. Uptake was below target in most member states, but not surprisingly its impact was greatest in the big milk producing countries, including Germany, Netherlands, France and the UK.

A key question is always whether things would have been a lot worse had a scheme not been in place. On balance, it probably did not have a massive impact. There were always clear signs that market pressures on incomes were delivering a reduction, with or without the supply reduction scheme. However it made cutting production an easier decision for the farmers who took part, which is welcome.

It was more useful, as a scheme, than blanket industry-wide programmes where the bulk of the 2016 aid package went. Above all, it made farmers focus on one inescapable reality – that the only way to influence a market is to regulate production. That can be planned, as was the case with milk quotas, or by imposing an artificial incentive to cut production.

While we know volatility will continue to affect dairy markets, it is doubtful whether the Commission will ever introduce a similar scheme to cut production. That it did so in 2016 was partly because it had funds available and was under an obligation to help offset the impact of ending milk quotas. It always knew this would lead to a surge in production in some member states, led by Ireland, and had to take this on board when it coincided with a sharp downturn in global dairy markets.

With that out of the system, Brussels is unlikely to pay for another milk reduction scheme, no matter how bad the market may get in the future. If farmers want this to happen, they will have to become involved with officially recognised producer organisations, which are exempt from normal competition regulations that prohibit supply controls to influence price.

This is what Brussels wants, linked to an effective futures market for and more up-to-date Milk Market Observatory data. This makes it easy to see how the Commission plans to help offset volatility.

A bigger challenge is to work out what is likely to happen in the UK after Brexit. While Brussels has been distancing itself from market intervention, it is unlikely to disappear completely from the reformed CAP. Support for butter, via private storage, is an annual feature of EU dairy support, but it is hard to see Defra introducing anything along these lines.

It is also difficult to see Westminster agreeing to allow milk producers to operate outside normal competition rules, so that they can manipulate supply to boost prices. The Commission sees this as a way to offset farmers' weak position in the food supply chain, but it is difficult to see Defra buying into a similar argument.

In both Brussels and London the days are over when farmers could rely on politicians to offset a market collapse.

Alternatives may include a risk management type insurance scheme, but whether through that or other mechanisms, dairy farmers will in the future have to take more responsibility for their own financial destiny than has ever been the case under the CAP.