Report warns of effects of EU overproduction

EUROPE – A report has warned that overproduction of dairy products in the EU could cripple prices.

The report, from a German agricultural association subsidiary DLG-Mitteilungen, 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 from East European countries such as the Ukraine.

The effects of overproduction are already apparent. In April, 56,200 tonnes of butter was in intervention storage. That figure is 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 that world demand for European dairy products such as skimmed milk has plummeted. As a result, milk powder values have fallen 30%.

In 1990 the EU was responsible for 40% of world skim milk powder exports. In 2001 the figure was 15% and this year it is feared that it will be even lower.

The report goes on to warn that although cheese consumption within the EU continues to be stable, standard cheeses are under extreme pressure as prices drop and consumers turn to more exclusive types.

Germany’s central market and price reporting 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 that cheese exports this year will be down by at least 5% to around 440,000 tonnes.