Forecast: EU Milk Production to Increase 11 Percent by 2020

Tuesday's end of decades-old milk quotas will benefit six EU countries the most.

According to a U.S. Dairy Export Council analysis, the end of European quota limits on Tuesday is likely to increase EU milk production 11 percent by 2020, with the EU producing 15.4 million more metric tons, compared to 2013 data.

The finding comes from a new USDEC Executive Brief, "5 Data-Based Forecasts about the end of EU Milk Quotas." The brief is free to subscribers of the U.S. Dairy Exporter blog. Learn more here.  

Seventy-six percent of the extra milk is expected to come from just six of the 28 EU countries—Ireland, Denmark, France, Poland, Germany and the Netherlands.

Germany is the largest milk producer in the EU. Increasingly large dairy cooperatives in that country will encourage growth in production volumes and the development of export markets.The annual increase in milk production in Germany is projected at 1.8 percent. Yet, even higher annual growth rates are expected in Ireland (4.6 percent), the Netherlands (3.7 percent) and Denmark (3.0 percent).

It will mean higher milk production in that part of the world, although estimates vary. Falling milk prices could moderate the immediate impact of quota removal.

While a recent European Commission report said there is not expected to be an immediate surge of EU milk production in 2015, a longer-term analysis by USDEC suggests that milk production could increase significantly by 2020.

Additional dairy commodities produced by the EU will mean increased competition with the United States and other dairy-exporting nations.

The good news for U.S. dairy exporters is that USDEC research concluded that although a bigger European export presence would create greater competitive challenges for U.S. suppliers, continued rising emerging market demand would absorb increased EU volumes and still leave ample opportunity for U.S. suppliers in nearly all sectors.

This is addressed extensively in a a 334-page USDEC study, "European Union: The Impact of the Removal of Milk Quotas in 2015."

The lengthy report has been condensed into a six-page executive brief for subscribers to this blog.

Click below to learn more.

The U.S. Dairy Export Council is primarily supported by Dairy Management Inc. through the dairy farmer checkoff that builds on collaborative industry partnerships with processors, trading companies and others to build global demand for U.S. dairy products.   

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