Eoin Kelly, Business Analyst, Bord Bia – Irish Food Board

EU milk production has increased for the first three quarters of this year, according to the latest EU milk market update.

Cow’s milk collections from January until September this year are up 5.5% compared to the same period in 2013. Supplies have surged in almost all EU 15 countries, with the largest percentage increases seen in countries such as Ireland (up 6.3%), UK (up 9.5%), Belgium (up 8.8%) and France (up 6.9%). Looking outside of the EU 15, significant increases have been recorded in Poland and the Baltic states.

Increased milk production has led to a rise in the production of processed dairy products. This rise has led to the production of 26% more SMP, 11.2% more WMP, 4.8% more cream, 4.1% more butter, 2.6% more cheese, 2.4% more concentrated milk and 0.1% more drinking milk.

EU exports in the first nine months of 2014 have increased year on year for most dairy products, driven by increases in butter and SMP exports. Butter exports increased 23% to reach over 113,000 tonnes for the first three quarters of 2014, while SMP exports have increased 58% to reach over 477,000 tonnes. However, exports of cheese and whey powder have shown a decrease, declining by 5.9% and 1.5% respectively for the first three quarters of 2014.

Prior to the import suspension, Russia was the main outlet for EU butter and cheese exports, however, exports of butter for the first nine months of the year  to Russia are similar with the same period last year,  while cheese exports decreased by 30%. This decline has been offset somewhat by increased trade to North Africa and Asia. Algeria, for example, is one of the main markets for milk powders, with EU exports of SMP and WMP to Algeria up by 137% and 176% respectively. Similarly, China, Indonesia and Egypt are also very strong importers of European SMP.

Focussing on demand, China continues to drive global trade, boosting imports for all the main dairy products, however, clear signs of a slowdown have been indicated, particularly for milk powders and butter. Similarly, Japan has shown some indication of a decline, with a reduction in its total imports of cheese of 3% for the first nine months of this year.

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