USDA says environmental concerns are holding up EU milk production

EU environmental restrictions are stagnating milk production in northwestern European Member States (MS), according to the US Department of Agriculture’s Foreign Agricultural Service (FAS) report, “Dairy and products Semi-Annual”. As a result, EU27 peak milk production was likely reached in 2020 and cow milk production in the EU27 is forecast at 144.6 million metric tonnes (MMT) for 2022, a decrease of 434,000 MT compared to 2021 and 836,000 MT down from 2020. 

European dairy industry experts expect EU milk production to decline further in 2023 and after, when the new Common Agricultural Policy (CAP) and the accompanying Farm to Fork Strategy (F2F) conditionalities require EU dairy farmers to adjust their production systems. 

From a policy perspective, as the impact of Brexit and Covid-19 on European dairy markets are mostly behind us, the implementation of the new CAP and F2F initiatives in 2023 will dominate the EU dairy sectors’ concerns. Strengthening EU environmental and climate mitigation policies will only deepen those concerns. As dairy experts anticipate a new wave of dairy farmers potentially quitting the sector, the major industry players are already adapting their corporate plans and strategies, as they adjust to these new EU policy realities. Available milk supplies are redirected towards their most profitable and strategic domestic and export market interests.  

That being said, the increase in production of non-cow milk remains strong, driven by consumers’ appreciation for goat and ewe derived dairy products. However, drinking milk consumption in the EU may decrease again in 2022 as people drink less liquid milk in the work place, after a spike in 2020 and 2021 when Covid-19 kept people home. This should allow additional milk for dairy processing to marginally recover after a decrease in 2021 because of the reduced milk production, according to the FAS. 

Cheese production is the preferred EU27 milk factory use, and this trend is expected to continue as several new cheese plants have emerged in recent years, mainly to produce industrial mozzarella for the food processing industry. Production for the EU27 in 2022 is forecast to increase to 10.6 MMT as consumption continues to increase year after year.  

This comes at the expense of the production of butter, non-fat dry milk (NFDM), and whole milk powder (WMP) for lack of additional milk production, which translates into decreased exports and domestic consumption for butter, NFDM and WMP, and increasing prices in the EU market, the report notes.