Germany’s milk outlook optimistic, says MIV

“The German dairy farmers have in 2014 again been able to increase their milk production over the previous year – an increase of 3.1 %. Thereby German production is above 31 million tons, which is more than has been produced ever before,” Karl-Heinz Engel, chairman of the German dairy industry association MIV, said at a recent brunch at the Grüne Woche show in Berlin.

The level in producer milk price was relatively high in the first half of 2014, so that an average milk price of about €0.37 net per kilogram (4.0% fat, 3.4% protein) was reached. This corresponds to the average price of the previous year, notes the chairman.

Overall the milk production at the beginning of 2015 in Germany and Europe is still at relatively high levels compared with a year ago. However in Germany, there has been a decline in milk production, and the lower milk prices will dampen the increase in milk production, or cause milk producers to cease production. But there will also be milk producers who will expand their production under these conditions.

“The outlook for the next months on the dairy market in 2015 are difficult and with uncertainties. With this in mind a dairy price of €0.30-31 on average for 2015 appears to be possible for Germany, should there occur no far-reaching political and economic crises,” Engel says.

Crucial for the future of the German dairy market will therefore be the extent to which the milk producers respond nationally and internationally to price signals and adjust their production accordingly, because almost half of German milk goes in the form of dairy products to other countries. Conversely, a substantial amount of dairy products are imported (> 40%) to Germany.

Internationally, the demand for dairy products has continued to grow to a per capita consumption of 109.6kg, so the global megatrend for dairy products is positive for the German export dairies and the markets continue to send stabilizing signals.