Annual National Workshop for Dairy Economists and Policy Analysts

Annual National Workshop for Dairy Economists and Policy Analysts

Session II: International Markets and Policy

Developments and Status of European Dairy Markets

Véronique Pilet, CNIEL, FranceBoston, May 13 & 14 2013

Recent developments in the world

World dairy production (all categories included)

Geographic breakdown of world milk production in 2012 (million tonnes)

World total: 760 million tonnes

Europe 21929%

EU-27 159Russia 32Ukraine 11Belarus 7

Asia 282 37%

India 132 China 45Pakistan 33Turkey 17Africa 39

5%Sudan 8Egypt 6Kenya 4

Central America 17 2%

Mexico 11

N. America 9913%

United States 90 Canada 8

S. America 71 9%

Brazil 33Argentina 12Colombia 8

Oceania 29 4%

New Zealand 20Australia 9

FAO Food Outlook November 2012, IDF-DCANZ for NZ

Asia still biggest contributor to milk output increase

Evolution of dairy production (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%

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

CNIEL / FAO Food Outlook

05 06 07 08 09 10 11(e) 12(p)70

80

90

100

80.3 82.5 84.2 86.2 85.9 87.5 89.0 90.2

Rendement (kg / vache / an)

Million tonnes

+ 1.7% / year

USA

05 06 07 08 09 10 11(e) 12(p)140

150

160

147 146

152154 153

155158 159


�

+ 0.9% / year

EU 25, 27

- 0.6%

Million tonnes

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

14

18

22

14.6 15.2 15.9 15.617.0 17.1

18.920.4


+ 4.9% / year

New ZealandMillion tonnes

05 06 07 08 09 10 11(e) 12(p)25

30

35

40

29.731.2

33.2 33.1 34.4 35.5

31.8 32.5


+ 3.6% / year

Pakistan

- 4.3% / year

+ 1.3% / year

Million tonnes

CNIEL / FAO Food Outlook

05 06 07 08 09 10 11(e) 12(p)20

25

30

35

24.726.7 27.1 28.1 28.9

30.4 31.5 32.8


+ 4.1% / year

BrazilMillion tonnes

05 06 07 08 09 10 11(e) 12(p)80

100

120

140

95 100108 112 116 122 127 132


+ 4.8% / year

IndiaMillion tonnes

05 06 07 08 09 10 11(e) 12(p)20

30

40

50

32.337.5 39.9 40.2 40.4 41.2 43.1 45.3


China

+ 5.0% / year

+ 11% / year + 1.1% / year+ 4.9% / year

Million tonnes

05 06 07 08 09 10 11(e) 12(p)28

30

32

34

31.1 31.332.2 32.5 32.6

31.9 31.6 32.0


+ 0.4% / year

Russia

+ 1.1% / year - 0.6% / year

Million tonnes

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

NB : deliveries in Europe and Japan

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

6,000

7,000

8,000

9,000Million tonnes

2010 2011 2012

Japan

2013

83,000

85,000

87,000

89,000

91,000

93,000Million tonnes

2010 2011 2012

United States

2013133,000

135,000

137,000

139,000

141,000


2010 2011 2012

EU 27

201315,000

17,000

19,000


2010 2011 2012

New Zealand

2013

30,000

31,000

32,000


2010 2011 2012

Rus-sia

2013

6,000

8,000

10,000

12,000 Billion litres

2010 2011 2012

Australia

2013

4,000

6,000

8,000

10,000Billion litres

2010 2011 2012

Argentina

2013

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

Geographical variations of dairy product consumption

Apparent dairy product consumption 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 90Algeria

153Mexico 108

Argentina 237

Brazil 173

USA 276

Canada242

EU287

Russia 245

Australia 309

Geographical variations of dairy product consumption

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 consumption 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

4000

8000

12000

0

50

100

150

200

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

Russia (USSR before 1992)

0

2,000

4,000

6,000

0

10

20

30

40


China

0

500

1,000

1,500

0

20

40

60

80


India

0

4,000

8,000

12,000

0

50

100

150


Brazil

*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 substantial markets

United StatesImport January 2013 / 12 months 2012

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

Japan Import 2 months 2013 / 12 months 2012

Cheese : + 1% / + 9%

ChinaImport 2 months 2013 / 12 months

2012 SMP : - 34% / + 29%

WMP : + 50% / + 27% Whey : - 6% / + 10%

RussiaImport* 2 months 2013 / 12 months 2012

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

BrazilImport 2 months 2013 / 12 months 2012

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

AlgeriaImport 11 months 2012

SMP: - 12%WMP: - 8%

Presence on the world marketRecent 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

AustraliaExport January 2013 / 12 months 2012

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

Cheese : + 5% / stable

United StatesExport January 2013 / 12 months 2012

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

ArgentinaExport January 2013 / 12 months 2012

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

EU - 27Exports 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%

Global dairy product tradeGlobal trade structuration 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

1,000

2,000

3,000

4,000

5,000

6,000

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

1,000

2,000

3,000

4,000

5,000

Butter

2008 2009 2010 2011 2012 2013

1,000

2,000

3,000

4,000

5,000

6,000

SMP

2008 2009 2010 2011 2012 2013

2,000

3,000

4,000

5,000

6,000

Cheddar cheese

2008 2009 2010 2011 2012 2013

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

jan fév mar avr mai jun jul aou sep oct nov déc250

300

350

400 € / 1000 litres

2011

USA 2012

2013

jan fev mar avr mai jun jul aout sep oct nov dec220

250

280

310 € / 1000 litres

2011

Argentina

2012

2013

jan fev mar avr mai jun jul aout sep oct nov dec340

370

400

430 € / 1000 litres

2011

Russia

20122013

jan fév mar avr mai jun jul aou sep oct nov déc300

350

400

450 € / 1000 litres

2011

China2012

2013

…Absorbed by high input prices

Eurostat, USDA, CLAL

100

300

500

70009 11 13

USD / tonne

07

Soya mealBrazil FOB

45-46% proteins

0

50

100

15009 11 13

USD / baril

07

Brent crude oilspot FOB

100

150

200

250

30013

€ / tonne

07 09 11

Feed wheatMarket price- European average

100

150

200

250

30013

€ / tonne

07 09 11

Fodder maizeMarket price – European average

Evolution of European butter and SMP stocks up until March 2013

Stocks of dairy products are unavailable

CNIEL / EU Commission

0

100

200

300

400

Public butter stocks

Private storage butter

04 06 1008 12

1 000 tonnes

0

50

100

150

200

250

300

Public SMP stocks in the EU

04 06 08

1 000 tonnes

10 12

European Markets

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

1,40,9

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

2,43,3

2,3

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

0,3

Year 2012Total EU 27 : 140,7 million tonnes

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12100

110

120

130

140

150

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

00/01

01/02

02/03

03/04

04/05

05/06

06/07

07/08

08/09

09/10

10/11

11/12

10,800,000.0

11,200,000.0

11,600,000.0

12,000,000.0Netherlands

Quota

Deliveries

million tonnes

+0,5%

excess

00/01

01/02

02/03

03/04

04/05

05/06

06/07

07/08

08/09

09/10

10/11

11/12

4,900,000.0

5,200,000.0

5,500,000.0

5,800,000.0Ireland

Quota

Million tonnes

+1,1%

excess

Deliveries

00/01

01/02

02/03

03/04

04/05

05/06

06/07

07/08

08/09

09/10

10/11

11/12

27,000,000

28,000,000

29,000,000

30,000,000Germany

Quota

Million tonnes

+0,1%

excess

Deliveries

00/01

01/02

02/03

03/04

04/05

05/06

06/07

07/08

08/09

09/10

10/11

11/12

22,000,000

23,000,000

24,000,000

25,000,000

26,000,000France

Quota

Million tonnes

-3,6%

Under-use

Deliveries

Cniel / European Commission

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

Quota utilisation

Under-use and excess of milk quotas in Europe

Excess

Limited under-use (< 3%)

Significant under-use (3 à 6%)

Considerable under-use (> 6%)

Situation by member state in 2011/12

Malta

Cyprus

00/01

01/02

02/03

03/04

04/05

05/06

06/07

07/08

08/09

09/10

10/11

11/12

110,000,000

120,000,000

130,000,000

140,000,000

150,000,000UE

Quota

Deliveries

Million tonnes

-4,7%

Overall under-use

EU 15 23 25 27

Amplified volatility on global markets finds itsway to European internal markets

déc-01déc-02déc-03déc-04déc-05déc-06déc-07déc-08déc-09déc-10déc-11déc-12déc-13

1000

2000

3000

4000

1 000 € / tonne

European SMP prices

01 13


1000

2000

3000

40001 000 € / tonne

World butter prices

01 13


1000

2000

3000

40001 000 € / tonne

World SMP prices

01 13


2000

3000

4000

50001 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

Implementation 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 – application 2nd April 2012 until 2020

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

in writing Negotiating power : possibility to create Producers Organisations (or PO

Associations) with or without transfer of ownership – no change for existing cooperatives 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 organisations (IBO) can be recognised by Member States PDO/PGI cheese supply regulation allowed

A greener CAP 30% of subsidies linked with environmental measures

A fairer subsidy distribution Single payment per hectare per member state Moderate rebalancing of national envelopes Capping of payments per farm Targeting of support to active farmers only More funds for young farmers and small producers

More competitiveness to guarantee food security Emergency measures in case of a crisis: intervention, mutual funds Rural development support jointly funded by the Community and Member

States Simpler procedures

CAP reshaping process 2013-2020

Evolution 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

Dairy Europe and its multiple faces

A region present on the global market showing a potential for growth…

…but facing a number of uncertainties: A new volatility, The end of the quotas, Reform of dairy policies with different impacts

according to the zones

CONCLUSION

Documents

Annual National Workshop for Dairy Economists and Policy Analysts