Currently, EU milk production data is available up to July, and is showing 5.8% growth over the same period last year. The record milk collection is said to be driven by very good forage availability even through summer, and strong farmgate milk prices.
Dairy cow numbers have increased as farmers prepare for the end of milk quotas in April 2015.
Farmgate milk prices remain at relatively high levels. The EU average price in July is 2.5% above last year, but prices at the state level vary. Twelve member states have lower than year-ago milk prices due to the effects of high milk supply and lower commodity prices flowing upstream.
Farmgate milk prices are down in Ireland (-4%), Germany and Netherlands (-1%), among others. In other member states, farmgate milk prices remain above year-ago levels: UK (+10%) and France (+3%).
The average lag between lower commodity prices flowing through to the farmgate level is between 3 – 6 months, according to the report.
Milk prices, and production, is therefore expected not to decrease in the short term in some member states. The report estimates that EU milk production will remain above year-ago levels until October. In November and December, production may dip below year-ago levels.
In 2015, milk production is expected to increase by 1.6%. The factors at play here are a slowdown early in the year as some states try to limit their superlevy fines under the final year of milk quotas, a rebound in production post-quota, and lower supply overall due to the lower farmgate milk prices expected.
Click here to view the European Commission report.
