The increase in world milk supply is not only due to the ending of milk quotas in the EU, according to the European Commissions latest Short Term Outlook for Dairy.
Between 2007 and 2015, figures from the Commission show that EU production increased by 10% or 15m tonnes.
However, over the same period, production in New Zealand increased by 36% (more than 5.5m tonnes) and by 12% in the US (more than 10m tonnes).
Close to 40% of the EU’s increase in milk production took place in 2014, which the Commission’s outlook attributes to very good milk prices in 2013/2014.
EU farmers in all Member States expanded production and this was substantial in France and UK, which never exceeded quota, according to the outlook.
Moving to 2015 and countries such as Ireland and the Netherlands, which were previously limited by quota, saw faster production growth.
Milk Market Observatory figures show that EU milk deliveries increased by more than 2%, and this despite the decrease in milk prices paid to farmers.
Deliveries were 5% higher deliveries during the last quarter of 2015 compared to 2014, which the outlook found was due to extremely mild autumn weather and cows being fed on grass much longer than 2014.
Farmers were also encouraged to continue producing due to the good quality of forage available, affordable feed prices and low energy costs instead of ceasing lactations earlier.
According to the outlook, the decline in milk production in New Zealand last year was smaller than expected (minus 1%), while production increased in the US by 1.2% and in Australia by over 2%.
Some 5m tonnes of additional milk was produced by these countries along with the EU in 2015, as import demand for dairy products held stable.
While domestic consumption increased in these countries (US, New Zealand and Australia), it was not fast enough to stop the price decline, the outlook found.
The outlook does not indicate that medium-term prospects for world dairy product consumption and imports are about to change; with world imports still expected to increase by more than 2% annually.
This corresponds to an average increase of global imports by 1.5m tonnes of milk equivalent (in total solids) per year.
However, the Commission says that this increase represents only 30% of the average increase in production of the EU, the US, New Zealand and Australia recorded in 2014 and 2015, thus the need for world supply increase to slow down to balance world import demand, and allow price to recover from present levels.
