1

Annual  Na(onal  Workshop  for  Dairy  Economists  and  Policy  Analysts  

Session  II:  Interna(onal  Markets  and  Policy  

Developments  and  Status  of    European  Dairy  Markets  

Véronique  Pilet,  CNIEL,  France  Boston,  May  13  &  14  2013  

Recent  developments  in  the  world  

2

World  dairy  produc(on    (all  categories  included)  

Geographic  breakdown  of  world  milk  produc(on  in  2012  (million  tonnes)  

World total: 760 million tonnes

Europe 219 29% EU-27 159 Russia 32 Ukraine 11 Belarus 7

Asia 282 37% India 132 China 45 Pakistan 33 Turkey 17 Africa 39

5% Sudan 8 Egypt 6 Kenya 4

Central America 17 2% Mexico 11

N. America 99 13% United States 90 Canada 8

S. America 71 9% Brazil 33 Argentina 12 Colombia 8

Oceania 29 4% New Zealand 20 Australia 9

FAO Food Outlook November 2012, IDF-DCANZ for NZ

Asia  s(ll  biggest  contributor  to    milk  output  increase  

Evolu(on  of  dairy  produc(on  (all  categories  included)  2007  to  2012  

World total: + 84 million tonnes

Europe + 6 Mt

Asia + 44 Mt

Africa + 8 Mt South America + 15 Mt

Oceania + 4 Mt

CNIEL / IDF, FAO Food Outlook Mt: million tonnes

North & Central America + 6 Mt

World average annual growth rate

+ 2.4%

3

Growth  dynamics  in  main  dairy  producing  countries  (1/2)  

CNIEL / FAO Food Outlook

70

80

90

100

05 06 07 08 09 10 11(e) 12(p)

80.3 82.5 84.2 86.2 85.9 87.5 89.0 90.2

Million tonnes

+ 1.7% / year

USA

140

150

160

05 06 07 08 09 10 11(e) 12(p)

147 146

152 154 153 155 158 159

+ 0.9% / year

EU 25, 27

- 0.6%

Million tonnes

10

14

18

22

05 06 07 08 09 10 11(e) 12(p)

14.6 15.2 15.9 15.6 17.0 17.1

18.9 20.4

+ 4.9% / year

New Zealand Million tonnes

25

30

35

40

05 06 07 08 09 10 11(e) 12(p)

29.7 31.2 33.2 33.1 34.4 35.5

31.8 32.5

+ 3.6% / year

Pakistan

- 4.3% / year + 1.3% / year

Million tonnes

4

NB : deliveries in Europe and Japan

CNIEL / USDA, ZMB, PZ, Alimentos argentinos, DCANZ, Dairy Australia

6

7

8

9 Million tonnes

2010 2011 2012

Japan

2013

83

85

87

89

91

93 Million tonnes

2010 2011 2012

United States

2013 133

135

137

139

141

143 Million tonnes

2010 2011 2012

EU 27

2013 15

17

19

21 Million tonnes

2010 2011 2012

New Zealand

2013

30

31

32

33 Million tonnes

2010 2011 2012

Russia

2013

6

8

10

12 Billion litres

2010 2011 2012

Australia

2013

4

6

8

10 Billion litres

2010 2011 2012

Argentina

2013

Growth  dynamics  in  main  dairy  producing  countries  –  rolling  12  month  basis  

Geographical  varia(ons  of  dairy  product  consump(on  

Apparent  dairy  product  consump(on  levels  in  2012  (kg  per  capita)    

CNIEL / IDF, FAO Food Outlook, PRB

World  average:  108  kg/capita   Less than 50 kg

50 to 100 kg

100 to 200 kg

More than 200 kg

China 38

India 105

Indonesia 13

Japan 71

Philippines 10

Iran 90 Algeria

153 Mexico 108

Argentina 237

Brazil 173

USA 276

Canada 242

EU 287

Russia 245

Australia 309

5

Geographical  varia(ons  of  dairy  product  consump(on  

CNIEL / IDF, FAO Food Outlook, PRB

Apparent per capita consumption (kg – in milk equivalent)

2006 2012 %

World 101 108 +7

Asia 61 71 +16

Africa 42 48 +14

Latin America 129 151 +17

Russia + Ukraine + Belarus 253 255 +1

EU + North America + Australia + New Zealand

290 284 -2

Income  and  dairy  consump(on    in  the  BRIC  countries  

NB : Human consumption of dairy products, butter excluded, in milk equivalent ; losses and dairy used as animal feed excluded.

CNIEL / FAOSTAT, FMI

0

50

100

150

200

0

4000

8000

12000

71 76 81 86 91 96 01 06 11

GNP per capita (USD) Dairy product consumption per capita (kg)

Russia (USSR before 1992)

0

10

20

30

40

0

2,000

4,000

6,000

71 76 81 86 91 96 01 06 11

GNP per capita (USD) Dairy product consumption per capita (kg)

China

0

20

40

60

80

0

500

1000

1500

71 76 81 86 91 96 01 06 11

GNP per capita (USD) Dairy product consumption per capita (kg)

India

0

50

100

150

0

4,000

8,000

12,000

71 76 81 86 91 96 01 06 11

GNP per capita (USD) Dairy product consumption per capita (kg)

Brazil

6

*Russian imports do not account for volumes originating from Belarus NB: Evolution of imports based on volume

CNIEL / Ubifrance, national customs

Demand  is  sustained  on  main  markets  

Recent  import  tendencies  on  substan(al  markets  

United States Import January 2013 / 12 months 2012

Cheese : - 1% / + 8% Caseins : + 15% / - 3%

Japan Import 2 months 2013 / 12 months 2012

Cheese : + 1% / + 9%

China Import 2 months 2013 / 12 months 2012

SMP : - 34% / + 29% WMP : + 50% / + 27% Whey : - 6% / + 10%

Russia Import* 2 months 2013 / 12 months 2012

Butter : + 60% / - 8% Cheese : + 12% / + 7%

Brazil Import 2 months 2013 / 12 months 2012

WMP: - 37% / + 29% Cheese : - 22% / - 29%

Algeria Import 11 months 2012

SMP: - 12% WMP: - 8%

Presence  on  the  world  market  Recent  export  tendencies  among  major  suppliers  of  the  world  market  

NB: Evolution of exports on a volume basis

CNIEL / USDA, Dairy Australia, Commission, ZMB, Ubifrance, national customs

Australia Export January 2013 / 12 months 2012

SMP: + 4% / + 21% WMP: - 54% / - 3%

Cheese : + 5% / stable

United States Export January 2013 / 12 months 2012

SMP: - 19% / + 2% Cheese : + 13% / + 16%

Argentina Export January 2013 / 12 months 2012

WMP: - 27% / - 1% Cheese : - 10% / - 10%

EU - 27 Exports 12 months in 2012

Skim milk powder: +1% Whole milk powder: -1%

Butter: +8% Cheese: +14%

Whey: +7%

New Zealand Export 2 months 2013 / 12 months 2012

SMP: + 17% / + 9% WMP: + 21% / + 15% Butter : - 14% / + 8%

Butter oil : + 26% / + 33% Cheese : + 17% / + 25%

7

Global  dairy  product  trade  

Global  trade  structura(on  of  Dairy  Products  in  2012*    (in  milk  equivalent  –  FAO  methodology)  

53 million tonnes

7% of global production

* Except intra-EU trade

Main supplying countries (%)

New Zealand 32

European Union 24

United States 10

Australia 6

Argentina 4

Belarus 4

Top 2 : 56 % Top 5 : 76 %

Main markets (%)

China 12

Russia 6

Saudi Arabia 6

Mexico 5

Algeria 5

Indonesia 3

Top 2 : 18 % Top 5 : 34 % CNIEL / FAO

1

2

3

4

5

6

WMP

2008 2009 2010 2011 2012 2013

World  market  prices  booming  

FOB price in Oceania US$ 1,000 / tonne up until April 2013

CNIEL / USDA

1

2

3

4

5

Butter

2008 2009 2010 2011 2012 2013

1

2

3

4

5

6

SMP

2008 2009 2010 2011 2012 2013

2

3

4

5

6

Cheddar cheese

2008 2009 2010 2011 2012 2013

8

Farmgate  milk  prices  throughout  the  world…  

NB: fat and protein content references differ from one country to another.

CNIEL, Alimentos argentinos, ZMB, USDA, China Dairy

250

300

350

400

jan fév mar avr mai jun jul aou sep oct nov déc

€ / 1000 litres

2011  

USA 2012

2013

220

250

280

310

jan fev mar avr mai jun jul aout sep oct nov dec

€ / 1000 litres

2011

Argentina

2012

2013

340

370

400

430

jan fev mar avr mai jun jul aout sep oct nov dec

€ / 1000 litres

2011

Russia

2012 2013

300

350

400

450

jan fév mar avr mai jun jul aou sep oct nov déc

€ / 1000 litres

2011  

China 2012 2013

…Absorbed  by  high  input  prices  

Eurostat, USDA, CLAL

100

300

500

700 09 11 13

USD / tonne 07

Soya meal Brazil FOB

45-46% proteins 0

50

100

150 09 11 13

USD / baril 07

Brent crude oil spot FOB

100

150

200

250

300 13

€ / tonne

07 09 11

Feed wheat Market price- European average

100

150

200

250

300 13

€ / tonne

07 09 11 Fodder maize

Market price – European average

9

European  Markets  

10

Cow’s  milk  deliveries  

6,0

11,7

30,2

24,5

1,9

3,0

13,6 5,4

4,9

10,9

2,9

0,9 1,4

0,9

0,7

0,5

0,7

0,5

0,7

1,4

9,8

Cniel / Eurostat, ZMB

More than 15 million tonnes

5 to 15

1 to 5

Less than 1

2,4 3,3

2,3

0,2 (Cyprus) 0,04 (Malta)

0,3

Year 2012 Total EU 27 : 140,7 million tonnes

100

110

120

130

140

150

96 98 00 02 04 06 08 10 12

EU15 EU 25

Cow’s milk deliveries

Million tonnes

EU 27

Ireland,  Germany,  Netherlands  &  France  most  dynamic  countries  

-22%

-16%

+1,2%

-11%

-34%

+7,1%

-3,2%

+6,0%

+8,3%

+7,4%

Cniel / Eurostat, ZMB

Strong progress (> 5%)

Moderate progress (0 to 5%)

Moderate decline (0 to -5%)

Strong decline (< -5%)

+6,4 %

Cyprus

- 0,1%

+4,1%

+6,0%

Strong ambition to grow:

Ireland (+ 50% between 2010 and 2020) Germany (+ 10 Mt within 10-15 years) The Netherlands (+ 1 Mt after the end of quotas for FrieslandCampina) Austria (+ 25% after the end of quotas ) ….

Evolution of milk deliveries between 2007 and 2012

11

10.8

11.2

11.6

12.0

00/01 02/03 04/05 06/07 08/09 10/11

Netherlands

Quota

Deliveries

million tonnes

+0,5%

excess

4.9

5.2

5.5

5.8

00/01 02/03 04/05 06/07 08/09 10/11

Ireland

Quota

Million tonnes

+1,1%

excess

Deliveries

27

28

29

30

00/01 02/03 04/05 06/07 08/09 10/11

Germany

Quota

Million tonnes

+0,1%

excess

Deliveries

22

23

24

25

26

00/01 02/03 04/05 06/07 08/09 10/11

France

Quota

Million tonnes

-3,6%

Under-use

Deliveries

Cniel / European Commission

Ireland,  the  Netherlands  and  Germany  are  for  now  limited  by  quotas.  France  is  reac(ng    (or  used  to  react)  differently.  

Quota  u(lisa(on  

Under-­‐use  and  excess  of  milk  quotas  in  Europe  

Excess

Limited under-use (< 3%)

Significant under-use (3 à 6%)

Considerable under-use (> 6%)

Situa(on  by  member  state  in  2011/12    

Malta

Cyprus

110

120

130

140

150

00/01 02/03 04/05 06/07 08/09 10/11

UE

Quota

Deliveries

Million tonnes

-4,7%

Overall under-use

EU 15 23 25 27

12

Amplified  vola(lity  on  global  markets  finds  its  way  to  European  internal  markets  

1

2

3

4 1 000 € / tonne

European SMP prices

01 13

1

2

3

4 1 000 € / tonne

World butter prices

01 13

1

2

3

4 1 000 € / tonne

World SMP prices

01 13

2

3

4

5 1 000 € / tonne

European butter prices

01 13

200

300

400

01

€ / 1 000 litres

13

Farmgate milk price

In Germany

NB : European quotations measured in France

CNIEL / FranceAgriMer, ZMB

Implementa(on  of  the  Milk  Package  

  Milk  Package  Reg.  1234/2007  (Single  CMO)  as  amended  by    European  Parliament  Reg.  261/2012  with  a  specific  part  on  «  milk  and  dairy  products  ».  Adopted  14th  March  2012  –  applica(on  2nd  April  2012  un(l  2020  

Main  aspects:    Contractual  rela4ons  between  a  milk  producer  and  his  client  can  be  specified  

in  wri(ng  

  Nego(a(ng  power  :  possibility  to  create  Producers  Organisa4ons  (or  PO  Associa(ons)  with  or  without  transfer  of  ownership  –  no  change  for  exis(ng  coopera(ves  which  keep  their  status  

  Max.  size  :  3,5%  of  EU  milk  i.e.  5  billion  litres  

  POs  must  be  declared  to  the  Member  State  

  Transparency  :  processors  must  declare  to  the  Member  State  the  collected  volumes  each  month  

  Inter-­‐branch  organisa4ons  (IBO)  can  be  recognised  by  Member  States  

  PDO/PGI  cheese  supply  regula(on  allowed  

13

  A  greener  CAP  

  30%  of  subsidies  linked  with  environmental  measures  

  A  fairer  subsidy  distribu4on  

  Single  payment  per  hectare  per  member  state    

  Moderate  rebalancing  of  na(onal  envelopes  

  Capping  of  payments  per  farm  

  Targe(ng  of  support  to  ac(ve  farmers  only  

  More  funds  for  young  farmers  and  small  producers  

  More  compe44veness  to  guarantee  food  security  

  Emergency  measures  in  case  of  a  crisis:  interven(on,  mutual  funds  

  Rural  development  support  jointly  funded  by  the  Community  and  Member  States  

  Simpler  procedures  

CAP  reshaping  process  2013-­‐2020  

Evolu(on  of  CAP  expenditure  (1980  –  2020)  

Notes: - 2011 = Budget; 2012 = Budget prévisionnel; - 2013 = Sous plafonds FEAGA pour paiements direct et dépenses de soutien des marchés + engagements pilier 2. Les montants développement rural 2013 inclus la modulation volontaire UK et Article 136 “montants non dépensés”. Comme ceux-ci s’arrêtent fin 2013, les montants correspondant sont intégrés dans les aides directes à partir de 2014.

DG AGRI

14

  Dairy  Europe  and  its    mul(ple    faces  

  A   region   present   on   the   global   market   showing   a  poten(al  for  growth…  

  …but  facing  a  number  of  uncertain(es:    

  A  new  vola(lity,      The  end  of  the  quotas,      Reform   of   dairy   policies   with   different   impacts  

according  to  the  zones

CONCLUSION