MIV reports on German dairy and Brexit

The annual conference of the German Milk Industry Association (MIV) took a look at the milk market and various important agricultural policy events for the year 2020 so far. Despite the corona pandemic, the market for milk and dairy products has been quite stable, though consumer behaviour had initially changed in the spring.

Due to the temporary discontinuation of deliveries to hotels, restaurants and communal catering, the demand from the German households increased significantly. Specialised delivery dairies for the bulk consumer sector suffered in particular. In contrast, demand in German and European retail rose to a record level.

The weaker market situation in the first half of 2020 led, with a time lag, to slightly lower payments made by German dairies to their milk producers. However, there is a strong regional variation. The average milk price in 2020 will be around €0.325 cents net per kilogram of raw milk nationwide. Due to the weather, milk deliveries in Germany in autumn 2020 have been slightly higher than the same period in the previous year, which was already a very dry year. In contrast to 2019, individual regions within Germany have been much more severely affected by the drought in 2020, why there will be regional feed shortages or low feed reserves for the winter months. The production capacities for cheese in Germany were increased slightly in 2020. But no further large-scale cheese projects are currently being planned.

The German dairy industry association is concerned about the possible “hard Brexit”. The negotiations are being conducted intensively and an agreement with the UK is sought, as the UK is a large net importer of dairy products. An example: the UK imports more cheese than it produces itself. Germany would also be affected by the hard Brexit and MIV notes that the Republic of Ireland would particularly suffer from the measures.

The MIV is expecting the discussions in Brussels on the free trade agreements with Australia and New Zealand with tension and (a certain) skepticism. The MIV advises that the EU Commission should not submit offers, which are too large, since on the other hand the sales volume for European goods will hardly increase. This is especially true for the New Zealand market.

Germany is currently implementing the directive against unfair competition (UTP directive) from Brussels. This takes place in the form of an amendment to the Agricultural Market Structure Act. The federal government is pursuing an ambitious approach, but it still needs some time for the deliberations. The dairy association is not entirely satisfied with the guideline. The fact that the regulations should no longer apply to a turnover of more than €350 million per year, is unworldly in the eyes of the MIV.

The dairy association is also awaiting the deliberations of the new EU Commission on genetic engineering labeling law with interest. According to the judgment of the ECJ, there is an increasing number of voices, especially from the scientific spectrum, who call for an intensive discussion and reassessment of the topic.

The reform of the Common Agricultural Policy 2020 is currently being negotiated under the German presidency. Conclusions can be expected soon, so the set of rules can be applied from 2023. The MIV is hoping that Brussels will provide relevant and affordable solutions without increased bureaucracy for the dairies.

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