AmericanFarm.com

Dairy experts studying milk production in Europe

By JONATHAN CRIBBS
Staff Writer

(May 12, 2015) It’s a milk party in Europe right now.
The European Union bounced its 30-year-old milk production quotas in late March, a measure that could change the global dairy market.
So, what does that mean for U.S. producers?
It depends on whom you ask.
Many dairy experts are waiting to see how much EU milk production increases, said Michael Lichte, vice president of dairy marketing and business planning at Dairy Farmers of America, the national milk cooperative based in Kansas City, Mo.
“We don’t think it’s going to be substantial growth [over the next year], but longer term I do think it opens up Europe to be more robust,” he said. “They’re going to be competing for the same markets the U.S. will.”
That’s in line with a March report from the U.S. Dairy Export Council in Arlington, Va.
Total EU milk production is expected to increase 11 percent by 2020 with the community of nations making 15.4 million metric more in that year than it did in 2013, the report said.
Much of that increase will come from heavy dairy-producing EU nations — including Ireland, Germany, the Netherlands and Denmark — which will see higher yearly percentage increases.
A lot of that milk will be converted into exportable commodities such as cheese and milk powders, whose markets will feel the greatest impact.
New competitive battlegrounds will include emerging markets such as southeast Asia — not just China — and Africa.
“The Asian market is going to be key,” Lichte said.
How should U.S. producers respond?
By meeting new competition with a more “customer-centric” approach, the export council report said.
“If U.S. dairy exporters stress the fundamentals of doing the right things — improving the quality and range of products, improving customer service, getting closer to customers — the United States should continue to build share in the global marketplace despite increasing competition from EU countries.”