October 29, 2005

USDA: EU-25 dairy and products annual 2005
 

With accession of the 10 New Member States (NMS) well behind us, EU dairy markets are stabilizing again and lasting market dynamics become clearer.

Milk production is increasing in the Czech Republic, Lithuania and Poland, while in some other NMS like Hungary, Slovenia and the Slovak Republic, which used to have higher dairy subsidy levels, the sector still has difficulties to adapt to the changed market conditions.

Especially the Polish dairy processing sector appears to be very efficient because of the large investments to upgrade the sector to meet EU sanitary standards and because of the increase in milk deliveries to the industry. 

In the EU-15, milk production is expected to increase from 2006 on, as in 11 MS three previously agreed yearly consecutive 0.5 percent production quota increases kick in. 

Most, if not all, of this increase in milk supplies is expected to end up in cheese production for domestic consumption. 

Changing consumer preferences for lower fat containing dairy products, including cheese, threaten the EU market with an oversupply of milkfat.  As a result, pressure may build on the EU butter markets in the coming years, unless exports can be competitive on the world market.

For the full USDA report, click here.