DENMARK/SWEDEN – Jens Bigum, managing director of Arla Foods, has told the company’s board that the dairy industry is in a worsening condition.

Arla Foods has been hit hard recently by currency fluctuations, which have affected its milk powder export business. The situation has been made more difficult by the fact that the EU is cutting export subsidies for whole milk powder.

He said that poor powder prices are driving processors to increase cheese production, which is one reason why cheese production in Germany and Holland was up 8% in January to March on the same period last year.

Bigum remained negative about future prospects. “We see this as a sign of things to come in the coming years – developments which will be driven by changes in the EU’s dairy policy and by the World Trade Organisation.” Bigum said that one positive aspect of current trading conditions is that Arla is now benefiting from the general fall in interest rates for the financing of the company’s new dairies at Stourton and at Vimmerby.

Last week, Bigum said that he is to retire at the end of this year.