EU Output Begins Rising in Post-Quota World

July 1, 2015 04:06 PM
EU Output Begins Rising in Post-Quota World

By Fran Howard

Despite a slow start to EU milk production in 2015, total output in Europe appears to be picking up now that European producers are no longer hobbled by milk production quotas, but not all countries are seeing gains. EU milk quotas, introduced in 1984 to address over-production of milk, were eliminated April 1 after more than three decades of operation.

“Earlier this year dairy producers in some key member states hit the brakes to avoid running into over-quota super-levy penalties at full speed,” says Sarina Sharp, agricultural economist with the Daily Dairy Report. “And output in some of the bloc’s largest dairy nations remained depressed in April even though quotas were no longer in effect.”

Milk production in the Eurozone’s two largest dairy nations, Germany and France, fell in April. Year-over-year output dropped 1.4 percent in Germany and 1 percent in France, according to preliminary data from Eurostat.

“Producers in other areas of Europe, however, were quick to step on the gas as soon as they were freed from quota limits,” notes Sharp.

On a year-over-year basis, April milk production rose 1.7 percent in the Netherlands, 4.2 percent in Poland, and 11.1 percent in Ireland. Gains in these countries helped push European milk output above year-ago levels in April, the first year-over-year gain of the year.

Both farm-level investments made in anticipation of the post-quota environment and relatively inexpensive feed are contributing to strong milk production in some countries in Western Europe. Weather has helped boost output in Eastern Europe, where dairy manufacturers have reportedly been busy handling heavy volumes of milk.

Sharp notes, however, that April’s milk production gain is not large enough to compensate for deficits posted earlier in the year. According to USDA’s Dairy Market News, the initial estimate for January through May milk production in the EU-28 remains 0.7 percent lower than the first five months of last year.

According to a recent European Commission report, EU milk production is expected to increase 1 percent in 2015, compared with last year. Longer-term, production is expected to post significant increases now that quota is no longer restricting output, according to the report.

“As milk production rises, Europe is stepping up butter and skim milk powder production,” notes Sharp.

While European cheese output is basically steady with year-ago levels, skim milk powder production in April jumped 0.5 percent above a year ago, and butter production was 1.7 percent stronger.


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