EU-27 Dairy and Products Annual Report 2010

In 2010, EU-27 raw milk production is stimulated by stronger domestic and international markets for dairy products, according to the USDA Foreign Agricultural Service.
calendar icon 30 October 2010
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USDA Foreign Agricultural Service

In 2010, growing domestic and international demand for dairy products combined with an improving overall economic situation in the European Union (EU) stimulated higher raw milk production.

This expansion in output is expected to continue into 2011 in response to stronger farm-gate prices and higher world dairy product demand. EU dairy herd inventory numbers continue to decline.

Though total animal numbers are on the decline, average milk yields are on the rise as the extensive culling of poorer performing cattle in 2008 and 2009 has left animals from stronger genetic stock in production.

In 2010, food processors are expected to consume most of the increased output in raw milk for cheese production, as that product generates higher profit margins than do butter, non-fat dry milk (NFDM) and whole dry milk (WDM).

In 2010, production of cheese is the major driving force of the EU’s dairy sector responding to strong export demand, mostly to the Russian market, and to regional recovery in the domestic market that overall had been dampened by the economic downturn.

In 2011, further growth in the cheese sector would be constrained by raw input availability.

In 2010, the European Commission shied away from intervening in the butter and NFDM markets due to high market prices. Intervention stocks of butter, built in 2009, are disappearing through internal food assistance programs and exports.

By the end of 2010 stocks of butter, remaining in private storage, should return to historical levels. In the second half of 2010 high world market prices for butter should stimulate butter exports fueled with intervention and private storage stocks.

Output of butter in 2011 is expected to decline in comparison to the 2010 due to lower domestic consumption and continued higher profitability on cheese production. Intervention stocks of NFDM are disappearing as well through internal food aid programs in 2010.

Exports are expected to increase due to strong demand from Russia and China in the wake of reduced competition from Oceania.

Remaining stocks should be partly disbursed through food assistance programs and export channels in 2011.

If market prices for butter and NFDM remain at or near current levels in 2011, EU intervention would not be likely.

In 2010, EU production and trade of whole dry milk (WDM) should decline in response to higher profitability of cheese production and increased competition from Oceania.

Further Reading

- You can view the full report by clicking here.
October 2010

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