April 4, 2016
Europe's high milk production for a few years will be disadvantageous for dairy farmers in New Zealand, said Mike Petersen, the country's special agricultural trade envoy.
Local dairy interests hope that farmers in Europe will taper output to avail the rise of global dairy prices.
Yet, that is "not going to happen anytime soon," said Steffi Wille-Sonk, spokesperson of European Dairy Farmers. The impetus to raise production is to obtain a return on investments for farmers.
Petersen, who was in Europe meeting with government officials and business leaders, remarked that "increased production is going to continue", especially for "most of the season".
"(It) is going to be difficult for thing for New Zealand," Petersen added, concerned about current market conditions affected by the spike in Europe's output.
According to the envoy, milk deliveries in Europe rose to about 15% to 20% yearly following the end of quotas. However, the European commission is involved in discussions about implementing in each countries measures that would reintroduce quotas to control production.
"It's on a voluntary basis so this is up to every country now to try and reduce production on their own terms and some countries simply aren't going to do that," Petersen said. "In fact, it's very difficult to see how that mechanism will work."
Petersen opined the measures will be sidelined in favour of increasing production. He identified Ireland as one of the countries to continue raising output. As a "seven-billion-litre producer", Ireland is seeking to expand its production by 50%, an endeavor Petersen believed could be achieved.
"Other countries I think will produce extra milk and (with increased competition) will settle down into what I call a normal rate of production," Petersen added.
However, he claims that it may take years before the European market settles. Meanwhile, New Zealand is expected to undergo a difficult season.
- Radio New Zealand