October 25, 2007
Sustained growth seen for EU dairy in 2007/08
In a report published by the US Department of Agriculture on the dairy industry in the European Union, high world market prices for most dairy have dictated the flow of dairy sector in the EU this year. However, the existing milk quota system despite the second of three consecutive 0.5 percent increases has stemmed the potential growth of milk production, particularly of small producers
The accession of Romania and Bulgaria in January this year have somehow increased dairy herd numbers by 9 percent on average and EU milk production quota for deliveries by two million tonnes of cow's milk.
For the rest of 2007, EU dairy is forecast to increase but will remain below the 2005 level due to growth of export demand and higher domestic production, according to the USDA. Cow inventories on the other hand are seen to decline due to the restructuring of the dairy sector. Raw milk production is expected to grow slowly in new member states (NMS) and further decreases are seen in EU-15 countries due to the decoupling process included in the Common Agricultural Policy (CAP). Among the EU-15 nations, milk production is seen to increase in Germany, Ireland and Italy while France and United Kingdom are expected to drop output.
For 2008, production is seen to grow continually as a third and final 0.5 percent increase in production quota in EU-15 agreed in the 2003 CAP reform will increase milk production this year.
Strong demand both overseas and locally is seen to generate a half percent increase in production. Despite good projections, the profitability remains in question due to sustained increases in feed costs. The presence of bluetongue disease in some EU countries is also seen to impact production next year.
For the full USDA report, please click here:
