EU Flexes its Dairy Export Muscle

European Union steps up its game following the end of quota limits, increasing market share and finding new customers. 

Final 2015 dairy export numbers for the four largest dairy suppliers in the world—Australia, the European Union (EU), New Zealand and the United States—illustrate Europe’s growing clout on the world stage. Facing highly competitive market conditions, EU suppliers expanded their market share of major products (skim and whole milk powder, whey proteins, cheese and butterfat) from 34 percent to 36 percent last year.

While the bloc is feeling the pressure of the prolonged global market imbalance—and is in fact a significant contributor to the oversupply—it did surprisingly well finding alternative markets to counter the Russian trade embargo and the flood of new milk triggered by the removal of production quotas.

In volume terms, the EU shipped 2.5 million tons of major products to countries outside its borders in 2015, an increase of 115,000 tons, twice the gain of New Zealand and Australia combined. U.S. exports of major products, by contrast, declined by 165,000 tons last year.

“The EU has emerged as the U.S. industry’s key competitor in the next decade,” USDEC noted in its recent mid-term market analysis, “U.S. Dairy Export Prospects: Looking out to 2020,” and 2015 numbers bear that out.

Prior to the embargo, the EU had been shipping close to 20,000 tons of cheese and 2,500 ton of butter per month to Russia. EU suppliers not only found new homes for milk going into Russian products but also for much of the increased milk flows from member states—most notably Denmark, Ireland and the Netherlands—seeking to cash in on world demand in the post-quota era that began in April 2015. EU cheese exports held steady in 2015, but supplier strategies to channel more milk to butter and skim milk powder paid major dividends.

In 2015, EU butter exports jumped 32 percent to 180,546 tons, its largest volume since 2007. It hardly missed a beat in finding new markets for lost Russian sales and then some, with a focus on China, the Middle East/North Africa and the United States.

EU SMP exports grew 6 percent in 2015 to 684,274 tons (after a massive 60 percent increase the previous year). Suppliers continued to make inroads in Southeast Asia and began making small but noteworthy gains in Mexico and South Asia. And even though SMP exports to the Middle East/North Africa slipped in 2015, volume was still nearly double that of 2013.

In the last nine months of 2015, after the removal of production quotas on April 1, EU dairy farmers produced 116.1 million tons of milk—4.1 million tons more than the same period the previous year. The bloc has to be aggressive to secure export markets or risk sending already-rising stockpiles to unmanageable heights.

EU market share among the four top global suppliers had fallen for two straight years in 2012 and 2013, but last year’s data (building on a strong 2014) clearly points to a revitalized competitive spirit in dairy exports.

For more on milk production from the top global exporters, visit USDEC’s Milk Production graph in the Research and Data section.

Learn more: 

• Growing European Milk Production Weighing on Markets
• New Zealand and EU Shift Dairy Product Mixes
• How Russia's Embargo of EU is Hurting U.S. Dairy Exports

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The U.S. Dairy Export Council fosters collaborative industry partnerships with processors, trading companies and others to enhance global demand for U.S. dairy products and ingredients. USDEC is primarily supported by Dairy Management Inc. through the dairy farmer checkoff. How to republish this post.