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Milk Prices in the European Union Continue to Fall
May 18, 2016

Milk prices in the European Union will continue to fall this year, with no improvement seen until 2017, as overproduction in the north of the bloc continues to weigh, French milk producers said on Tuesday.

As of the end of March the volume of milk collected in European farms had already risen by around 4-5 percent on year, Giampaolo Schiratti, chairman of milk manufacturers’ union Syndilait, told reporters.

European milk producers have been struggling with weak prices fueled by a Russian embargo on Western food, lower Chinese dairy imports and a scrapping of EU output quotas last year, leading to a wave of farmers’ protests in top EU farm producer France.

“2016 will be another year of milk oversupplies, notably because we also have large stocks from past years. The question is when will this end?,” said Schiratti, who also heads Candia, part of France’s top dairy cooperative Sodiaal.

The European Commission in March said it expected the volume of milk delivered to EU dairies this year to reach 153.8 million tonnes in 2016, up 1.4 percent from last year when deliveries were already estimated to have risen by 2.5 percent.

Rising production this year would be led by countries such as Ireland, the Netherlands, Denmark and possibly Britain, the Commission had said.

“For butter and milk powder, we have reached the worst thanks to public storage in EU. For milk we will likely go even lower this year,” Caroline Le Poultier, director general of the French dairy union Cniel, said.

EU raw milk prices dropped more than 11 percent on average in the year to March 2016, with a fall of 8 percent in France, Eurostat data showed.

French milk producers, who say they are limiting local output, blame their Northern counterparts for worsening oversupply in the bloc.

“We are in an economic war. Clearly other countries don’t have the same policy and we have to fight against that,” Syndilait’s deputy chairman Emmanuel Vasseneix said.

Demand is also weak. French supermarket sales of milk dropped 2.5 percent in France last year to 2.6 billion litres, hit by changing consumption habits, notably French people eating less breakfast, Syndilait said.

At the same time exports fell 3 percent compared to 2014, due to lower exports to China but also to some oil producing countries where revenues were hit by falling crude oil prices.

However, milk exports could rebound in the long run as emerging markets increasingly turn to animal proteins, Schiratti said.

Source – Dairy Today


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