Reasons to be cheerful post-quota

We are now living in the post-quota world here in Europe. Back to 1984, as it were, and there are worries that the EU may well return to the bad old days of butter mountains and milk lakes.

I know it’s scary and people are nervous that milk prices will fall through the floor, never to recover. But if there’s anything that’s been learned in the last 31 years, it’s never to be nervous about volatility. This industry is all about volatility, and it’s only become worse over the years. It is just a fact of the industry today.

Now, I will give you some reasons to be cheerful. First, there was a small item in the news this week that China is coming back into the market. I doubt the Chinese will buy in silly amounts at silly prices this time, but the fact that some purchasing is returning is good news. Second, the insular dairy market is not what it was all those years ago. We have more ways to move milk around the globe, in different formats. Butter is so last century, when you want to get dairy from one side of the world to another side. The powder dryers that have sprung up can process that milk lake into portable powder and send it to places that don’t have chill chains.

Finally, European dairy is about quality. People across the world think of European cheeses and dairy products and think, ah, that’s a good, safe, healthy product. Fonterra has bet large amounts of money in establishing footholds in Europe, in order to serve its Asian customers with that quality dairy output. It is a sales point that nobody in the EU should forget.