Farm Ireland

Tuesday 26 September 2017

Milk will be 'white gold' in EU over next decade

Milk is set to be Europe's 'white gold'
Milk is set to be Europe's 'white gold'

Anne Fitzgerald

Milk will be Europe's "white gold" over the next decade a senior EU agricultural economist has predicted.

Tassos Haniotis, director of economic analysis with the EU's DG Agri, said that despite current difficulties in the dairy sector the market outlook for the next 10 years remained very positive.

World demand for dairy products was growing steadily and prices will remain firm at around €350/t, he said.

He pointed out that EU deliveries are forecast to increase by 12m tonnes between now and 2024 and he predicted there will be further concentration of production in regions with lower costs such as Ireland.

He said most of the additional milk will be channelled into cheese and powders. EU cheese consumption continues to grow and there will be increased exports of skim milk powder (SMP) and whey powder.

While there has been a lot of talk about demand in the Far East being met by New Zealand, Mr Haniotis maintained that the Kiwis had reached the limit of their productivity.

Proof of that is the investment which New Zealand was now making in the EU, he added.

Mr Haniotis forecast that dairy farmer incomes will increase in real terms by 9pc in the period to 2024. The value of production will ease slightly but this will be accompanied by a fall in real terms in the cost of fuel, fertiliser and other inputs.

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These inputs include cereals which are set to be below 2012 record levels but still somewhat higher than historical levels.

The EU demand will be driven by feed and biofuel use, while a solid world demand will lead to large exports of cereals.

Outputs of wheat, maize and barley are set to grow substantially.

EU meat consumption per capita continues to decline slowly, he said.

Beef decline

World consumption of pigmeat and poultry is growing steadily and this will support firm or even increasing world and EU prices in these sectors. Pigmeat production in the EU is set to stabilise and poultry production to increase.

However, the economist was less optimistic on beef, with production set to decrease.

After a short-run recovery, the sector is set to move to a slower decline. This is due to the continued move by consumers towards poultry and, from 2017 inwards, more beef coming from the dairy herd.

After a long period of decline, sheepmeat production and consumption is expected to show a modest recovery.

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