EU dairy farmers look east for profit
An end to EU milk quotas is expected to unlock much export potential for farmers.
After more than 30 years, the European Union’s milk quota system came to an end on Tuesday (31 March). For the first time since 1984, dairy farmers will not face fines from the EU if they exceed their protection quotas.
Global demand for milk is expected to exceed supply by 25 billion litres a year by 2020, and many EU member states will want to export to Asia, and China in particular. Demand for dairy products in Asia is growing fast because of a rising population, the adoption of Western eating habits, and a surge in income. But some major milk producers fear that the absence of quotas will de-stabilise the market.
China currently imports one million tonnes of powdered milk – two-thirds of the world’s supply – of which 18,500 tonnes comes from Ireland. China needs these imports as its domestic market has yet to recover from a food-safety scandal in 2008, when milk (including powdered milk for infants) was found to be contaminated with a chemical that caused kidney problems. Local and regional producers may eventually be able to meet demand, but for the time being imports are expected to continue to rise.
Ireland is aiming to increase its milk production by 50% by 2020, but it faces competition from other member states, including Poland and the Netherlands, in chasing a share of the Asian market for dairy products.
LTO Nederland, a Dutch umbrella organisation for agriculture and horticulture firms, expects milk production in the Netherlands to rise significantly once quotas have been scrapped, perhaps by as much as
15%-20%.
Click Here: cheap INTERNATIONAL jersey
In 2013, dairy exports from the Netherlands rose by 12% compared to the previous year to reach €8 billion. One-third of Dutch dairy production is for the domestic market, another third is sold in Europe, and the rest is exported outside the EU.
Poland had concerns about milk quotas when it joined the EU in 2004, but its dairy sector has grown steadily over the years, and it is predicting a further 30% increase in production. Once a significant importer of milk products, Poland now exports 30% of its milk.
Poland, along with Portugal, was one of the few countries lobbying for quotas to continue, worried that unrestricted production would make exporting more difficult. But it appears to have been reassured about the health of the sector.
However, the end of quotas does not mean total freedom for farmers. They will, for example, still need to comply with environmental criteria and cope with fluctuating prices.
Phil Hogan, the European commissioner for agriculture and rural development, said last week (26 March) that he had no major concerns about the future of the EU’s dairy industry. But he said that the EU would continue to monitor the situation because the abolition of the quotas could “raise issues about price volatility”.
Hogan said the new era would be an opportunity for growth and jobs, but a challenge because “an entire generation of dairy farmers will have to live under completely new circumstances”. Even with quotas, EU dairy exports have increased by 45% in volume and 95% in value over the past five years and market projections indicate that the prospects for further growth remain strong.