(BRUSSELS) - Germany on Monday opposed a plan, being considered by EU farm ministers, to increase milk quotas by two percent this year, with France also voicing concerns owing to volatility in the sector.

"I will refuse" to back the measure, German Agriculture Minister Horst Seehofer, whose country is the main producer in Europe, told reporters as he arrived for the meeting with his EU counterparts in Brussels.

"Prices have been falling for several weeks already and a quota rise would put prices under further pressure and put the future numerous producers in jeopardy," he said.

He stressed the need in particular to provide specific aid to farmers in mountainous regions who do not have the option of switching to non-dairy production should prices fall further.

French Agriculture Minister Michel Barnier also expressed reservations.

"I can understand that we could increase the quotas very moderately this year because the demand is there, but I would warn against any decision that could have significant consequences in the future," he said.

He therefore said he was in favour of regulatory tools which would allow decisions to be taken on future quota increases with regard to market conditions so as not to destabilise areas which cannot switch to non-dairy production.

France was set to abstain in the vote on the quota increase, while Germany and Austria were expected to vote against it.

In that case there would not be sufficient opposition to prevent the measure, which does not require unanimous agreement, from going through.

EU Agriculture Commissioner Mariann Fischer Boel, arriving for the day of talks between European farm ministers, said research showed that "the market can absorb more" milk production.

She described the increased purchasing power in China and India as great opportunities for the European dairy market, not least for European cheeses with their "excellent reputation".

The two percent production hike would bring an extra 2.84 million tonnes of milk onto the market after it takes effect, as expected, on April 1.

EU milk quotas are due to be lifted in 2015, but the European Commission wants to begin phasing them out early due to signs that booming demand is here to stay.

The quotas are the legacy of a by-gone era when Europe's dairies produced more milk than Europe could consume or export, leading to infamous lakes of milk bought up by the EU to help keep prices from collapsing.

Agriculture and Fisheries Council

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