Europe – European Commission plans to reform the Common Agricultural Policy are expected to cause a drop in butter production, but boost cheese and fresh dairy products’ production.

A proposed increase in milk production quota is predicted to cause a corresponding rise in EU-15 milk production, of 2% above Agenda 2000 levels by 2009.

This is expected to cause a rise in fat production, and, combined with the proposed cut in the butter support price, will cause the butter market price to fall (23% compared to Agenda 2000 by 2009).

With lower price incentives, butter production is projected to fall. This would favour the production of cheese and fresh dairy products, as they would benefit from lower milk prices to satisfy growing demand.