The European Union’s decades-long milk quota system came to an end today, giving European producers the ability to expand capacity to meet growing global demand for dairy products rather than limit future supplies. According to Rabobank, European milk processors have prepared for the lifting of milk quotas by investing in extra capacity, mostly in Northern and Western Europe.
Rabobank believes that medium-term global demand in the global dairy market will increase at a compound annual growth rate of above two percent from 2014 to 2020. This increase will be driven by continuing population growth, urbanization, globalization and increasing disposable incomes. Rabobank warns, however, that price volatility is likely to be an issue and extreme price variations will continue to affect dairy supply chains.
According to the U.S. Dairy Export Council, the end of these quotas likely will increase EU milk production 11 percent by 2020, when compared with 2013 data. USDEC said 76 percent of the extra milk will come from Ireland, Denmark, France, Poland, Germany and the Netherlands. Read more from USDEC here.
What does this mean for U.S. dairy exports? USDEC anticipates that additional products from the EU will increase competition with the United States and other dairy-exporting countries, but continued and increasing global demand for dairy products will leave ample market opportunity for U.S. dairy exporters.
For more information, contact Beth Hughes, IDFA director of international affairs, at email@example.com.