Wednesday, February 28, 2007

EU's share of global milk production falling

The EU's share of global milk production is falling as a result of the quota system according to Rabobank dairy specialist Mark Voorbegen. Addressing a seminar addressed by Dairy UK, he said that the EU had a 27 per cent share of the global market in 2005, down from the 1995 level of 31 per cent. By 2015 it is forecast to fall to 25 per cent (although by then quotas may have been abolished).

Termination of the EU quota system would become crucial for the long-term global supply/demand balance. Milk volumes in the EU-15 would remain stable in aggregate terms but with some relocation to more favourable areas. There would be a moderate growth in supplies in the accession states.

The UK had a good scale of farming and a good structure but Voorbegen had doubts about its export capabilities and whether it could bring a higher volume of milk into the EU. Just like farmers in Australia and New Zealand, farmers would have to adjust to more milk price volatility in the future.

Rudolf Schmidt, dairy farmer adviser for the German Farmers Union, said that the main challenge in Germany to a competitive dairy industry was from the biofuel industry. An overdependency on subsidies for biofuel 'could drive milk production away.'

Around ten per cent of the German agricultural area, some 1.6 million hectares, are already accounted for by biofuel crops. Moreover, bioenergy was making feed for dairy farmers more expensive.

Just as well they haven't heard the half jocular suggestion that cows should pay a climate change levy for the amount of methane they produce (which has far bigger impacts on global warming per capita than carbon dioxide).

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