The growth in milk production in the EU since January 2017 “is quite simply unsustainable in the current market”, European Agriculture Commissioner Phil Hogan told EU farm ministers, gathered in Brussels on Monday 29 January to discuss, inter alia, the problem of skimmed milk powder stocks.
Production, encouraged by high prices, has risen in countries such as Ireland (9.1% between January and September), Poland (4.7%), the United Kingdom (3.9%) and Italy (3.5%) and, more recently and “more worryingly” in the largest producers, France and Germany, said the commissioner, sounding the alarm.
An increase of almost 6% in milk collection in the EU was recorded in the month of November 2017 alone, a situation that is likely to lead to an overall increase of 1.6% over the whole of 2017 – equivalent to some 2.4 million tonnes more.
“There’s a risk of overproduction when we still have stocks of 380,000 tonnes of skimmed milk powder on our hands”, Hogan warned (see EUROPE 11949). He argued that “it’s not good to continue to produce for a market that’s not there and then confidently expect taxpayers, through the Commission in this case, to bear the cost”. “Operators have to assume their responsibilities by responding to the very clear signals from the market”, he stressed to ministers.
Sugar and pork: no measures needed at this stage. When asked by the Polish delegation, the commissioner also took stock of the situation in the sugar sector, where prices have dropped as a result of increased production and the fall in prices on the international markets. The average monthly price of sugar was €410 per tonne in November 2017, €80 lower than in September when production quotas ended.
This, however, is in line with European Commission forecasts. “I’m convinced the sector is adapting to the ending of production quotas. The sugar industry has increasingly concentrated and improved its competitiveness in recent years and will able to cope with the current market situation. In my opinion, no measures are needed at this stage. Nevertheless, my services are continuing to keep a very close eye on the sugar market”, Hogan said.
The situation on the pork market was very similar. 2017 was a relatively good year, particularly the first six months when EU pork prices were much higher than average.
Prices are now falling “but this will make EU exports more competitive against other major exporters” (United States, Canada and Brazil) in 2018, the commissioner said. He promised to monitor market developments in the coming months, in particular the impact of the African swine fever epidemic that is spreading across the east of the EU. (Original version in French)