Increase in EU subsidies may threaten dairy recovery

The latest push for extra dairy subsidies by several EU member states could slow the global market recovery, according to a market analyst.

The main problem of subsidies increase for EU farmers is that it would slow down the rate of supply adjustment required to rebalance the global dairy market, said Rabobank dairy market analyst Tim Hunt.

Rabobank dairy market analyst Tim Hunt says an increase to the subsidy program would affect the market.

The renewed interest in dairy support seen around the world this year is the biggest problem for Australian farmers, said Caroline Saunders, Director of agribusiness and economics research at New Zealand's Lincoln University.

These subsidies, in total, reduce New Zealand returns to the farmer by around about 45 percent and Australia by about 40 percent, she said.