EU and U.S. Dairy Herds to Start 2016 Higher

December 25, 2015 04:51 AM

It should come as no surprise that the global dairy industry will start 2016 with large stocks of dairy products. What is less known is that two of the three major milk-producing regions will also start the year with a large supply of milking cows, particularly Europe since milk production quotas are no longer a limiting factor there.

According to Eurostat’s recently released annual dairy cow data by country for the year ended 2014, Europe began 2015 with 23.6 million, or 0.4 percent, more milking cows than a year earlier, and the herd has likely grown over the past year.

“As of the end of last year, Europe’s milk herd was just over 2.5 times larger than the U.S. herd,” says Sara Dorland, analyst with the Daily Dairy Report and managing partner at Ceres Dairy Risk Management, Seattle. “Based on EU milk production of 327 billion pounds in 2014, production per cow calculates to approximately 13,890 pounds, a far cry from the U.S. average of 22,258 pounds for the  same year.”

Germany and France continue to maintain the largest milking herds, accounting for 18.2 percent and 15.7 percent, respectively, of the total. Last year, Germany grew its milking herd just 0.66 percent, while France’s dairy herd remained unchanged. Preliminary monthly milk production data from Eurostat, however, show that output gains in Germany and France are picking up. German output in October rose 3.3 percent above a year-earlier, and production in France was 2.9 percent higher.

The rising star of the EU dairy industry, Ireland, grew its milking herd to 1.13 million head by the end of 2014, 4.2 percent more cows than the prior year and the country’s largest herd since 2004, according to Eurostat. Production per cow in Ireland of 11,375 pounds rose 0.5 percent in 2014, compared with 2013 levels, based on Ireland’s total cow numbers and milk production.

“Given the modest gains in production per cow and a likely lack of incentive to use supplemental feeds, Ireland’s 11.4 percent January through October milk production gain could be the result of more cows on the ground,” says Dorland. In October, year-over-year output in Ireland was 26.7 percent stronger than the previous year, according to preliminary monthly data from Eurostat.

“Likely, several countries, including the Netherlands and Belguim, are in a similar field, with more cows driving increased milk production,” says Dorland. “An expanding milking herd does not bode well for near-term slowdowns, suggesting milk production growth could continue to gain steam at the start of 2016.” October production in the Netherlands and Belgium rose 11.4 percent and 9.8 percent, respectively, compared with October 2014 levels.

The same degree of enthusiasm is not occurring in the United States, but some year-over-year expansion in the milking herd has occurred. As of November 30, the U.S. milk herd stood at 9.313 million head, according to USDA’s recent Milk Production report released in mid-December. That means U.S. dairy producers increased the year-over-year national milk herd by 29,000 cows.

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