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Commission Presents Positive Market for Next Decade

01 February 2013

EU – Dairy production will grow moderately over the coming decade and benefit from a positive market,a European Commission report has predicted.

Dictated by expected increases in global demand and the EU dairy market outlook has suggested EU exports and commodity prices will be sustained. Export performance is expected to double for cheese and triple for skimmed milk powder (SMP), according to Prospects for Agricultural Markets and Income in the EU 2012-2020.

Cheese output is forecast to grow by 7 per cent on 2011 figures reaching 9.6 million tonnes by 2022. The outlook forecasts SMP production +23 per cent reaching 1.3 million tonnes over the same period.

African and Chinese exports have driven the SMP industry and it is exports that are expected to drive the market. Figures for 2022 will be 678,000 tonnes, a 30 per cent lift on 2011, the EC said.

Milk production is expected to grow moderately through the outlook period but remain below potential growth rates due to quota elimination. A cumulative increase of 5 per cent has been calculated from 2011 figures reaching 159.3 million tonnes.

This is coupled to decreasing usage on farm and greater transport quantities reaching the dairy.

Complicating the forecast is the quota phase out period. Several member states, including Austria and Germany, over produced on quota restriction for 2011/12 whereas Bulgaria has only utilised 47 per cent.

Short term Butter forecasts predict constant production with an 8 per cent rise expected on 2011 levels amounting to 2.4 million tonnes. EU butter markets are uncompetitive against global butter quotations but within the EU a predicted consumption rise may offer scope for market development.

Demands led by China and other South-East Asian areas will dictate the market. The Commission added that Near and Middle-East markets will also strongly effect cheese, SMP and WMP outlooks.

The commission caveated the outlook stating that many factors considered are variable. A weak euro against a strong dollar has been assumed and global demand; industry advances and weather across the other main dairy suppliers of US, New Zealand and Australia have been acknowelged as difficult to accurately envisage.

TheCattleSite News Desk

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