Swiss worry over EU quota end

Exporters of liquid milk and associated products to the European Union (EU) may have to work harder to secure sales in future, with the EU finally scrapping its production quotas. They may also have to fend off new tough competition from EU exporters in their domestic markets.

The European dairy farmers were already producing sufficient milk, butter and cheese for the EU market before the end of the milk quotas, warns Alexander Anton, the secretary general of the European Dairy Association (EDA). He told Dairy Industries International: “We have production of 108 per cent, 110 per cent already; we are competitive and we don’t need imports”, he explains. Indeed, he claims dairy “imports into the EU have been decreasing over the past 10 years,” with only certain segments, such as New Zealand butter and Swiss Emmental cheese holding their own.

Even there, Swiss producers face a double fear; that of being squeezed out by increased production resulting from an end to the quotas, as well as the effects of the Swiss Franc rising against the currently weak Euro. Switzerland  imported milk into the EU valued at €5.8 million in 2013, the last year for which data is publicly available.

The exchange rate “doesn’t help” the situation of Swiss dairy manufacturers, explains Sandra Helfenstein, spokeswoman for the Swiss Farmers’ Union. “The Swiss milk producers have even now, before the new situation in the European Union, big economic problems and no solution in sight,” she says, adding that exporters will nonetheless keep pressing for overseas sales of their most successful product: cheese. Manufacturers continue to seek export expansion in the US, China, Japan, and Russia, she says, “but it is not so easy, because our products are expensive and the worldwide competition hard.”

This sentiment is shared by the Swiss dairy association, Swiss Milk. “It won’t be easy, but our exports will try to be maintained,” Heinz Minder says, who also concedes that the Euro-Swiss Franc (CHF) exchange rate “has changed disadvantageously” of late. This time in 2014, one Euro bought CHF 1.22. Now the currencies are largely at parity.

“We have observed that the current weakness of the euro concerns the Swiss dairy industry relatively strongly. Decisions in milk price cuts have already been made, the processors and exporters in turn, must accept margin losses,” Jurg Jordi, spokesman for the Swiss Federal Office of Agriculture (FOAG) says. – Carmen Paun and Cillian Donnelly in Brussels