GERMANY – Butter and skim milk powder in Germany could be selling into intervention before the first two months of 2002 are out, according to Milchindustrieverband (MIV).

However, the dairy association predicts that increases in export and feed ingredient demand will soon put the skim powder market back on its feet. Meanwhile, cheese production and sales are expected to continue their expansion in Germany with further production capacity due to come on stream in the first half of this year. Processors expect the market to cope easily with the increases.

The leading dairies in Germany have openly stated that they will be looking for price increases to cover extra energy costs in the coming year, but supermarkets are already announcing a wave of price reductions on a range of foods including milk.

Experience from retail price wars over the last two years has shown that the biggest traders have enough power to put a stop to any planned increases by dairy processors. The country’s leading discounter, Aldi, leads the way. Its southern division slashed its butter prices by over 10% in two consecutive reductions within three weeks in December. The current retail price for its own brand of Deutsche Markenbutter is 0.86 euro per 250g.

With immediate retaliations from other retailers expected, market analysts predict that Aldi will use the changeover from deutschmarks to euros to slash the butter price once again.