Bart Van Belleghem, Managing Director of the Brussels-based Eucolait organisation, told delegates attending the AFBI dairy conference that the EU is currently exporting 10% of its milk solids output internationally. Eucolait is the European Association of Dairy Trade, representing the European wholesalers, exporters and importers of dairy products.

Mr Van Bellegham added:

“We have seen a gradual expansion of national quotas since 2009, in order to give a soft landing in terms of the transition out of quotas. This was agreed courtesy of the mid-term quota review, held in 2008.  However, I am aware that certain regions, including the Republic of Ireland, are seeking to get further butterfat restructuring, so as to reduce their superlevy liability. To date though, the European Commission has shown no indication that it intends changing the current policies on this matter.

“There is now fundamental evidence to confirm that milk production in the EU is becoming increasingly focussed in countries with an Atlantic seaboard.”

Looking to the future, in terms of European milk returns, Bart Van Belleghem said that increasing supplies will play a role in determining prices.

“Russia has been importing large volumes of European cheese over recent months. This may change given the current problems in the Ukraine,” he confirmed.

“Powder exports remain a key factor in determining the overall price paid for milk at the farmgate level. Where whole milk powder is concerned, the EU has not been able to compete with New Zealand where the fat content of this product is concerned.

“Beyond the abolition of quotas, there have been very bold statements from a number of EU member states regarding the growth of their dairy sectors.

“This will, almost certainly, lead to a growth in milk output. At the present time, the EU Commission is only predicting a 5%increase in EU milk output for the decade beyond 2015.

“However, the Eucolait perspective on this issue is that 10% growth is a more relevant figure, in terms of milk output changes that will be achieved over the next decade. Significantly, cheese consumption is set to grow during this period. In contrast the outlook for milk powders is not so bright.”

Bart Van Belleghem stressed that price risk tools must be made available to dairy farmers, in order to allow them deal with future volatility within the milk sector.

He concluded:

“Farmers will force the dairy industry to come up with workable solutions on this issue.”