“Verona would be the ideal venue for a discussion table in the dairy sector because it has its own traditions in the field and is effectively located within much the same distance of the capitals of the most important production regions.”
So said Angelo Rossi, founder of the website www.clal.it, the world reference portal for the dairy market, now flanked by Teseo for primary sector markets. “However, it is vital for the inter-sector system to strengthen itself through an approach based on reciprocal trust between the parties” says Rossi, “with 'active' operators, i.e. milk producers and processing and distribution managers, in order to achieve positive results for individual companies and Made in Italy.”
The latest milk quotes in Verona (Monday 23 May) posted an upturn for spot prices of Italian raw milk (€25.75/100 kg, +5.10%) as well as imported pasteurized whole milk (€25/100 kg, + 5.26%), although these figures are still 18-21% lower than those posted 12 months ago.
In any case, such a small price differential between Italian and imported raw material ought to favour the use of Made in Italy milk thanks to lower transport costs.
While waiting for the European Union to adopt a new save the milk sector plan, which will be discussed next 27-28 June during the EU Council of Agricultural Ministers – the last under the Dutch Presidency – the world scenario indicates a further increase in production.
Compared to last year, production in the main exporting countries (EU-28, Belarus, USA, New Zealand, Australia, Ukraine, Argentina, Chile, Uruguay and Turkey) in the period January-April 2016 was up by 3.7% on a trend base, with output coming to 27,580 million tonnes during March alone.
Shifting attention to Europe, in March all EU-28 countries, except Portugal and Croatia, posted in increase in production compared to March 2015, the last month when the milk quota system was applied and before the explosion in EU output. The best production performances in terms of quantity were posted by Ireland (+32.77%, so it is hardly surprising that Ornua, the country's most important cooperative with 14,000 members and turnover of 1.8 billion euros, has said it wants to increase output by 50% by 2020 to 7.4 billion litres), followed by Belgium (+21.29%), the Netherlands (+17.90%), Denmark (8.77%), Germany (+6.90%) and France (+1.81%). Italian data (the only figures still awaiting official confirmation) indicate a trend-based increase in production of 4.30% in March 2016.
“It will be interesting, as they become available, to compare values in April and May this year with those for the same period in 2015, i.e. figures for the months immediately after the abolition of milk quotas which curbed output throughout the first quarter of 2015,” Rossi added.
On a global scale, in the meantime, two phenomena might affect prices
China is confirming its trends towards importing butter, cream, cheeses and UHT milk, preferring finished products over powdered milk. Following the downturn in of imports of bulk and packaged milk in February 2015, the trend has continued to rise, with a peak of 125.5% last December (compared to the same month a year earlier) and significant growth was also seen between January and April 2016 (+70.3%).
Exports of German milk continue to consolidate performance levels: with 20,270 tonnes exported to China last April, Berlin overtook Australia and New Zealand, which respectively delivered 5,286 and 7,169 tonnes. France also strengthened its position (exporting 10,410 tonnes in April) and even Spanish producers grabbed a slice of the market by emphasising two aspects such as traceability and animal welfare held in high regard among middle class consumers in China.
In the northern hemisphere, a resumption of exports from Argentina is expected, encouraged by the new approach implemented by President Mauricio Macri with its major emphasis of supporting international trade in agro-food products.
Russia is still an importing country, although it is now pursuing policies to strengthen domestic production thanks not the least to imported know-how. Sector magazine Top Agrar suggests that the Deutsche Milchkontor Group (DMK) is about to finalise the acquisition of several Russian companies to produce cheese in south-west Russia.
On the domestic front, however, Germany under Chancellor Angela Merkel might well provide milk producers with an aid programme worth over 100 million euros against an undertaking by farmers to reduce production, the only way – it seems – currently effective in terms of raising market prices.
Positive signals are also in Italy, with exports of cheese Made in Italy which last February (latest figure available, source: Clal.it analysis) posted +12.9% by volume (trend-based). The upsurge was driven, in particular, by fresh chees, such as mozzarella and ricotta (+26.6%), grated or powdered cheese (+15.7%), Asiago (+26%) and Gorgonzola (+8.5%), followed by Grana Padano and Parmigiano Reggiano (+1.8%) and provolone (+0.6%).