New EU members will not threaten dairy industry, claims report

EUROPE – A Danish Dairy Board and Swedish Dairy Association survey claims that new countries joining the EU will bring new opportunities for the European dairy industry.

There are twelve Central and Eastern European Countries (CEECs) hoping to join the EU by 2010, with Poland, Hungary, the Czech Republic and Slovakia leading expected to join in around 2004.
According the survey, milk production from the CEECs will increase the EU total by around 23% and will bring in at least 105 million new customers. The standard of living of these consumers is expected to be rising steadily by the end of the decade, and this could bring increased demand for Western European value-added dairy products.

The survey reports that there have already been significant changes to these countries’ dairy industries. Almost all of the Hungarian milk processing industry is now in the hands of Western European processing companies. Other countries have infrastructure problems that keep the cost of home-produced milk and dairy products relatively high. For example, in Poland 62% of dairy farms have less than five cows.

The report states that only 61% of milk produced in CEECs is delivered to official processors, and this could cause difficulties when the countries try to establish EU quota systems.

The European Commission expects a surplus of milk production in CEECs by 2008 and by then countries such as Bulgaria and Romania may also have joined the EU. However, the surplus is estimated to be 900,000 tonnes annually, only 0.7% of projected EU milk production in 2008.

The EU plans to introduce quotas based on average production between 1995 and 1999. The report speculates that if this goes ahead, output will be lower than projected figures.

The survey also predicts that the feared flood of cheap dairy products from east to west will never come. The Scandinavian researchers point out that even now Polish milk with EU export certificates is priced at a level competitive with cheaper Western European prices whilst CEEC produced skimmed milk powder is a similar price to that produced within the EU. Although butter from CEECs tends to be cheaper than in Western Europe, it was still higher than world prices last year.

The report claims that the most serious threat to the EU dairy industry comes from the Czech Republic. In 2000 the country produced 2.7 million tonnes of milk, and this is rising. The country’s population is only 10 million, so it is already a net exporter of dairy products.