Sweet German success turns sour

Soaring consumer prices towards the end of 2007 helped to secure a record year with Germany dairy processing turnover hitting €22.3 billion, an increase of 6% on the year.

Dr Karl-Heinz Engel chairman of the country’s Milk Industry Association (MIV) also announced one of the best ever export years for the sector with earnings topping €5 billion.

But increased retail prices on the domestic market in the last six months and the milk producers’ knee-jerk reaction to these with rapidly rising milk output means storm clouds lie ahead for the German sector, warns the MIV. The retail price hikes have hit sales on the home market with even cheese consumption dipping with a projected per capita figure of 22kg for 2008. This will be down some 400g on the year and represents the first negative move in this respect since 2005. Dr Engel says his MIV members (with 100 dairies representing nearly all milk processed in Germany) want to push Brussels for reintroduction of export restitutions to aid milk product sales abroad.