German export volumes up so far
In the first half of 2020, German export volumes of some important products such as cheese, mixed milk beverages, butter and whey products were in some cases significantly better than the previous year’s result. Cheese achieved an increase of 2.4%, and butter shot up by 20%, according to the German Export Union for Dairy Products (EXU).
Overall, the popularity of German cheese is gratifying: almost 650,000 tons have been sold outside the German border. In the two previous years it was around 630,000 tons. Third countries have provided a significant boost and are now taking almost 10% more than in the previous year. That is now 112,400 tons of cheese that leave the EU from Germany. In North Africa, Algeria (2,000 tons) and Libya (2,800 tons) saw particular demand for German cheese, while South Africa (-49 %) kept a low profile. Chile has also ordered around 10% less this year with a quantity of just under 4,200 tons. However, the country is also very busy with internal political disputes this year.
Overall butter sales reached very good export volumes in the period under review. In the previous months, the year-on-year increase was sometimes even greater. Currently around 76,000 tons of butter have been exported, which practically corresponds to the result from the two very good years 2015 (76,600 tons) and 2016 (77,700 tons). With 67,500 tons, the EU neighbours ordered considerably more (+18 %) than in the previous year. Saudi Arabia increased its amount by around 900 tons. However, Saudi Arabia is currently moving 1,100 tons at a comparatively low level, but is the most important third country partner. South Korea increased the import volumes of German butter from 430 tons to 870 tons, as did the United Kingdom (+13%/584 tons). In contrast to Japan, where the quantities fell from 1,100 to just under 500 tons.
Whey powder is also around 10,000 tons up on the previous year at 166,000 tons. On the one hand, considerably more quantities went to the Netherlands (16,000 tons), on the other hand, China has shown more interest again. For whey concentrate, which is actually only traded with neighboring countries in the EU, the statistics show an increase of 20,000 tons.
In other product segments, however, the picture is divided. For example, exports of milk and cream in small packages to neighbouring EU countries fell by 30%, while sales outside the EU rose by 15%. The 22% increase in exports of drinking milk to China (157,800 tons) is remarkable, although there were significant logistical problems in the context of the corona pandemic. The total trade deficit for this category amounts to 8% compared to the same period last year.
The declining EU demand for drinking milk is by no means a result of the coronavirus. For several years now, the quantities have been falling sharply, especially to France, the Netherlands and Italy. This trend has continued this year. The designation of origin certainly plays a role here, which is handled patriotically by some member states, while Germany continues to rely on EU origin. However, this year the exports of tank milk to neighboring EU countries (-7.6%) also fell significantly, including to Italy (-20%). Tank milk exports to the Netherlands remained stable and Denmark required 40% more, but remained below 40,000 tons.
It did not go so well for German condensed milk (unsweetened) either: 5% less sales volume in the EU and 37% less in third countries meant that the previous year’s result was missed by a total of around 20,000 tons (-13.7%). The volume in third countries makes up about a fifth of the total. In the EU, it was mainly Portugal that prevented even worse numbers. At 32,000 tons, 6,500 tons more were delivered there than in the first half of 2019. With 11,000 tons, the Asian region was about 4% behind the previous year, which is, however, a significantly better result than in the previous months of this year. The cumulative decrease in the first three months was almost 3%.
So far there has not been as much demand for skimmed milk powder as in the first half of 2019. Even if the backlog has also decreased in recent months, around 30,000 tons less have been exported from Germany so far. With around 190,000 tons, the half-year result of 2015 (187,000 tons) is achieved. In the last three years, the exported quantities always exceeded the line of 200,000 tons, not least due to high production quantities and the depletion of stocks from the intervention.
The effects of the corona pandemic presented German dairies and their trading partners with major challenges. The international trade in dairy products has remained largely stable despite the massive negative economic effects and the dairies have contributed to the security of supply of people with high-quality food.
However, due to the loss of food service customers at home and abroad, products had to be sold more cheaply than a year ago.
The competition between dairies is and will remain tough even in the corona crisis. The bottom line is that the milk volumes from Germany could be handled well overall thanks to the strong sales in third countries, but unfortunately significantly less remained in the dairies’ till. This is also reflected in the lower prices paid by German dairies. As the pandemic is not over, itwill continue to affect the global flow of goods. Against the background of the economic framework, increasing payment risks in the export business as well as the weak currency relation to the dollar and low oil prices, the situation for the dairy industry will remain difficult for the foreseeable future.