Growing Demand Should Mean Bright Future

European dairy farmers face a positive medium term outlook with average yield increases per cow benefitting from global markets fuelling exports, a European Commission report has predicted.

World demand is expected to be driven by China, Russia and Middle Eastern markets. Higher end value-added products are emphasised as strategic products for the future in the report, ‘Prospects for Agricultural Markets and Income in the EU 2012-2020’.

Figures are based on an increase of official 2011 figures and are an approximation of how the global dairy market is currently set to pan out.

Experts project that the global dairy market will expand to the extent that, despite EU dairy exports all increasing, the total EU share of the global market will have decreased to 32 per cent of world exports.

At the industry centre is the EU dairy herd which is expected to shrink by three per cent to 22.2 million whilst productivity per cow rises.

Overall milk production will rise slowly, remaining below growth rate potential due to the piecemeal quota phase out. Forecast to rise by five per cent, milk production will reach 159.3 million tonnes by 2020.

Raw milk deliveries, thought to rise to 147 million tonnes, will be helped by on farm consumption decreasing by an expected 12 per cent. This is attributed to a contraction of subsistence production.

The disparity between the member states is shown by average milk production forecasts per cow. The Commission predicted figures of 7,200 kg per cow for the EU 15 and 6,000 kg per cow for the EU 12.

Some member states have achieved half of their annual quota. Romania (-43 per cent) and Bulgaria (-53 per cent) are countered by overshoots in Austria, Ireland, Germany and Cyprus.

Quota underutilisation is not offset however. The report confirms quota underutilisation at 2.2 million tonnes.

Cheese and Skimmed Milk Powder exports are forecast to double and treble respectively.

Exports of cheese +7 per cent to 9.6 million tonnes and SMP + 23 per cent at 1.3 million tonnes have been pinpointed as the main product for future expanse.

Within Europe, cheese demand is expected to grow by four per cent per capita, with average consumption rising to 17 kg.

All commodity prices will be sustained although the butter outlook is more modest, anticipated to increase by eight per cent to 2.4 million tonnes.