EU price threat warning

A report has warned that continued overproduction of dairy products in the EU could cripple prices.
The report, from the Mitteilungen subsidiary of German agricultural association Deutsche Landwirtschafts-Gesellschaft, also warns that outlets for EU production such as Russia are being steadily reduced. In recent years, Russia has imported around 200,000 tonnes of butter each year, but this is increasingly under threat from East European countries such as the Ukraine.
The effects of overproduction are already apparent. In April, 56,200 tonnes of EU butter was in intervention storage, up from 4,260 at the same time in 2001.
This, combined with high production in Eastern Europe, New Zealand, Russia, the USA, Australia and Argentina, means world demand for European dairy products such as skimmed milk has plummeted. In 1990 the EU was responsible for 40% of world skim milk powder exports. In 2001 the figure was 15%, this year it could be even lower.
The report goes on to warn that although cheese consumption within the EU continues to be stable, standard cheeses are under pressure as prices drop and consumers turn to more exclusive types. Market research agency ZMP has said that wholesale prices for German Gouda have dropped 5% since the beginning of the year. Dutch Gouda has lost 10% of its wholesale price.
These low prices are not attracting buyers from outside the EU. ZMP estimates cheese exports this year will be down 5% to 440,000 tonnes.