Less volatility but more uncertainty
It’s been a relatively quiet year for dairy, despite the political machinations globally. The annual meeting of the German Dairy Industry Association (MIV) detailed expansions for cheese production in the country, and Ornua, the Irish concern has added a new cheese facility in Spain, which will serve the ever-expanding mozzarella market.
As things wind down for 2019, we should be in for an interesting 2020. First up, Common Agricultural Policy reforms in the EU, which will determine income support. Should the prices drop for milk, these will become more important for farmers. Another issue is the tariffs on cheeses and other dairy products, as a result of the Boeing-Airbus dispute. Not sure where the outlet will be for the cheeses hit by 25 per cent duties, such as Italian ones.
Second is the outcome of Brexit. While the Irish have a plan and have been preparing for all the eventualities, the milk producers in Northern Ireland may find themselves looking at how to process their intake without sending milk to south Ireland, or taking a hit on tariffs. Again, not sure what will happen on that front.
From the US side, the continuing trade wars with China have had an impact on this country’s farmers. Farmers overall are feeling the strain, due to ongoing disputes. That being said, higher tariffs on EU products may improve the domestic outlook, as seen in Russia with the EU ban. So it might be an upside in that arena. The US cheese market is rapidly expanding and improving. The Canada-Mexico-US trade pact is also on its way to being ratified.
In Oceania, New Zealand dairy giant Fonterra saw a massive write-down for assets in Brazil, China, Venezuela and other countries for this last year, but is hoping next year will turn a corner for the co-operative and has already reported firm prices for its whole milk powder (WMP). The company says it will now prioritise New Zealand milk
So, maybe not so quiet after all. It makes for a lot to write about.