EU - Europe’s dairy herd grew in 2013 as the industry advanced to milk quota removal, a new European Commission (EC) report shows.
Significant increases were seen in France, Germany and Ireland, with the biggest lift – of 3.6 per cent – seen in the Netherlands and Spain.
EC analysts say a Dutch average price of €44/kilograms in December incentivised production.
The news, from the EC’s quarterly agricultural outlook, follows bullish post 2015 growth targets set by member states, including a 50 per cent milk output lift by 2020 from the Irish government.
Spain’s herd increase follows the Ministry of Agriculture’s decision to roll out a sector-wide dairy sustainability package.
This was in reaction to the Spanish milk crisis of 2012.
Eighteen months ago, Spanish producer associations were up in arms over a farmgate average price of €0.27/litre being nullified by production costs of €0.40 cents/litre.
Since then, a coordinated industry-wide effort to stop supermarkets retailing milk at a loss has edged the sector towards an even keel.
Similar responses have been reported across other member states. In the UK, the voluntary code of practice was introduced to offer dairy farmers a ‘level playing field’ in negotiations with milk buyers.
This has brought a sea change in the role of UK processors, according to a leading UK analyst reacting to supermarkets slashing milk retail prices this week.
Tesco and Sainsbury’s both cut four pint bottles by 39 pence to £1, reversing the trend ESA Retail had seen of retail values climbing 3.9 per cent over the past year.
‘New world’ dairy markets mean UK dairymen are no longer vulnerable to absorbing competitive milk pricing on this high street, was the analyst's assessment.
However, voluntary supply chain reforms have generally meant farmers are getting fairer prices over the past year.
The result, according to the European Commission’s quarterly short term outlook, has been a weighted farmgate price across Europe of €40.4/ 100 kilograms.
Growing Asian milk powder demand should counter huge reductions in dairy buying in North Africa and Viet Nam. The report said China’s buying should mean a stable year for dairy prices in 2014.
Meanwhile, cereal forecasts are positive.
At this early juncture, crop progress reports suggest a strong harvest is possible this year and the International Grains Council and US Department of Agriculture sees maize stocks replenishing.
Climatic conditions, barring the west of Europe, have been favourable and the EC has reported 2.8 per cent increase in soft winter wheat sowings.
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